Energy stocks lead US broad market higher as oil prices rise - 30.3.2017

Nasdaq outperforms while Dow extends losses

US stock market edged higher on Wednesday lifted by energy stocks. The dollar strengthened on Federal Reserve officials’ hawkish comments: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, closed up 0.2% at 99.926. The S&P 500 rose 0.1% settling at 2361.13 led by energy stocks, up 1.2% while six of the eleven primary sectors finished in the red led by financial stocks. The Dow Jones industrial average fell 0.2% to 20659.32 weighed by losses in UnitedHealth and Travelers shares. The Nasdaq index rose 0.4% closing at 5897.55 helped by 2.1% gain in Amazon shares.

After Conference Board’s positive consumer confidence report the previous day the major events were Federal Reserve officials’ comments: Chicago Federal Reserve President Charles Evans, who is a voting member of the central bank’s interest-rate-setting committee, said he expects “one or two” more interest-rate increases this year. Boston Fed President Eric Rosengren advocated a rate hike at every other Fed meeting and San Francisco Fed President John Williams said he sees three more rate hikes this year. The dollar benefitted from these hawkish comments, with further positive economic data providing additional support: pending home sales rose 5.5% in February, the highest level in nearly a year. Today at 14:30 CET Federal Q4 final GDP will be published. At the same time initial jobless claims and unemployment claims will be released, the tentative outlook is positive. At 16:30 CET natural gas storage change will be released by Energy Information Administration. At 17:00 CET Federal Reserve Bank of Dallas President Robert Kaplan will speak at the US Chamber of Commerce, in Washington DC.

European markets shrug off start of Brexit negotiations

European stocks extended gains on Wednesday as markets shrugged off the official commencement of the UK’s negotiations to leave the European Union. Both the euro and British Pound weakened against the dollar. The Stoxx Europe 600 added 0.3% after 0.6% gain the previous day. Germany’s DAX 30 added 0.4% to 12203. France’s CAC 40 rose 0.5% and UK’s FTSE 100 index gained 0.4% to 7373.72.

Other than a downward pressure on euro and Pound markets’ reaction to the start of Brexit negotiations was tepid, indicating investors are not expecting major big surprise from negotiations which will determine the terms of UK’s departure from the trade block it joined in 1973. Shares of London Stock Exchange Group and Deutsche Börse rose 2.7% and 1.7% respectively after European Union’s antitrust watchdog blocked the planned $28 billion merger between the two. Today at 11:00 CET March Consumer Price Index will be released in Germany, the outlook is negative for euro.

Asian stocks down

Asian stock indices are lower today after a mixed session on Wall Street overnight. Nikkei ended down 0.8% in a choppy trade today led by financial stocks as dollar inched higher against the yen. Chinese stocks are down on liquidity concerns as the central bank refrained from injecting short term funds for a fifth session: Shanghai Composite Index is 1% lower and Hong Kong’s Hang Seng Index is down 0.2%. Australia’s All Ordinaries Index outperformed adding 0.4% lifted by energy stocks and weaker Australian dollar against the dollar.

Nikkei

Oil prices rise on lower than expected US stockpile build

Oil futures prices prices are rising today supported by crude output disruptions in Libya. Further support came from US inventories official report indicating lower than expected rise in inventories: The EIA reported that crude inventories rose by 900 thousand barrels to a weekly record 534 million barrels last week, less than half the 1.9 million-barrel climb reported by the American Petroleum Institute late Tuesday. Bigger-than-expected declines in gasoline and distillate stockpiles also were bullish for oil prices. May Brent crude fell 2.1% to $52.42 a barrel on Wednesday on London’s ICE Futures exchange.