Global markets follow oil's lead

US stock market edged higher on Wednesday following a recovery in oil prices late in the session. The dollar pared earlier losses and according to the live dollar index the ICE US Dollar index, a measure of the dollar’s strength against a basket of six currencies, ended little changed at 97.484. The Dow Jones Industrial Average gained 0.3% settling at 16484.99, United Technologies and Apple were the best performers up 2.2% and 1.5% respectively. The S&P 500 added 0.3%. Recovery in materials and energy stocks, which ended 1% and 0.9% higher respectively, lifted the stocks as reversal in oil prices relieved concerns about the ability of heavily indebted energy companies to repay their debts. Shares of Target rallied 4% after the company swung to a profit in the fourth quarter. Equities rebounded despite disappointing economic reports: activities in US services sector dropped in February with flash PMI services index coming in at 49.8 instead of expected 53.7. A reading below 50 indicates contraction. The contraction in services sector is seen as another indication of slowing growth of US economy following weakening in manufacturing sector. Sales of new homes dropped 9.2% in January to the lowest level since October.

Today at 14:30 CET Initial Jobless Claims and Continuing Claims will be released in US. The tentative outlook is negative. At the same time January preliminary durable goods orders will be released. The tentative outlook is positive. At 15:00 CET December House Price Index will be published. The tentative outlook is neutral. At 16:30 CET Natural Gas Storage Change will be released by the Energy Information Administration. And at 18:00 CET Federal Reserve Bank of San Francisco President John Williams speaks on the economic outlook in New York.

European stock markets closed sharply lower on Wednesday as declining oil prices weighed on market sentiment. The euro was down 0.1% at $1.1008 late Wednesday in New York, compared with $1.1016 late Tuesday. The Stoxx Europe 600 index lost 2.3%, Germany’s DAX 30 dropped 2.6% and CAC 40 slid 2%. Energy stocks were the hardest hit, shares of Total lost 1.7%, Statoil tumbled 5.2% and Royal Dutch Shell dropped 1.6%. Citi analysts revised sector rating on European miners to neutral from bullish citing a balanced risk-reward for miners after the recent rise in stock prices. BHP Billiton dropped 8.4% following a 6% loss the previous day after posting a $5.67 billion first-half loss, with Anglo American and Glencore each sinking roughly 10%. Today at 10:30 CET second estimate of Q4 GDP will be released in UK. The tentative outlook is neutral for Pound. At 11:00 CET January final Consumer Price Index will be released in euro-zone. The tentative outlook is neutral.

Nikkei advanced 1.4% today to 16140.34 as investor confidence was buoyed by rebound in oil prices overnight. Yen weakened against the dollar, boosting exporters’ stocks. Trading was thin ahead of Friday's G-20 meeting in Shanghai which will be watched closely for any discussion of a coordinated policy response to recent global market turmoil. Chinese stocks closed sharply lower with CSI 300 index of 300 largest companies listed on Shanghai or Shenzhen exchanges down more than 6% as investors took profits after a recent rebound.

Oil prices are falling today after ending higher on Wednesday as official data showed a weekly decline in US crude production and strong demand for gasoline. Brent crude settled 3.4% higher at $34.41 a barrel on London’s ICE Futures exchange. Though US crude stockpiles rose 3.5 million barrels according to Energy Information Administration Wednesday report, total crude production fell by 33,000 to 9.1 million barrels-a-day last week and gasoline supplies fell 2.2 million barrels. Rising crude stockpiles are still pointing to excess supply, and signs of slowing global growth are additional bearish development, increasing the likelihood of slower demand growth for crude oil.

Gold is edging higher for the third session in a row after spot gold climbed as high as 2.1% on Wednesday, hitting $1252.91 an ounce, within reach of one-year high of $1260.6 attained on February 11.