Oil rally boosts markets

US stocks rose on Tuesday with rallying oil prices boosting investor risk appetite. The dollar strengthened against the yen helped by Japan’s Finance Minister Taro Aso’s remark about possible intervention to stop yen’s appreciation after it hit 17 month high against the dollar. According to live dollar index data the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, ended little changed at 94.05. The Dow Jones Industrial Average gained 0.9% settling at 17721.25, recording its best daily gain since March 11. The S&P 500 closed 1% higher at 2061.72 posting a year-to-date gain of 0.9% as all ten main sector finished in positive territory. The energy sector led the broad market index with 2.8% gain. The Nasdaq Composite Index closed up 0.8%. Equities advanced despite expectations of lower quarterly earnings: S&P 500 profits are expected to have fallen 7.8% in the first quarter, according to Thomson Reuters IBES. Shares of Alcoa lost 2.7% after the metals producer reported a 92% drop in earnings in first quarter due to lower commodity prices.
In economic reports the US government posted a $108 billion budget deficit in March, more than double the amount from the same period last year. The National Federation of Independent Business small-business index fell to a two-year low in March. The International Monetary Fund again lowered its forecast for global growth citing volatile financial markets and slowdown in developing economies. Today JP Morgan will report quarterly results. At 13:00 CET Mortgage Applications will be released in US. At 14:30 CET March Advance Retail Sales and Producer Price Index will be published. The tentative outlook is positive. And at 20:00 CET Federal Reserve issues the Beige Book of economic condition.
European stocks advanced on Tuesday supported by gains in commodity companies. The euro edged lower against the dollar. The Stoxx Europe 600 rose 0.5%. Anglo American shares jumped 9.2% after the mining company’s De Beers unit reported a third straight month of higher rough-diamond sales. Major oil companies Total and BP gained 1.8% and 1.5% respectively. Italian bank shares gave up some of the previous day’s gains after the Italian government late Monday outlined the establishment of a fund aimed at reducing the bad loans in country’s banking sector. Germany’s DAX 30 gained 0.8% settling at 9761.47. France’s CAC 40 rose 08% and UK’s FTSE 100 added 0.7%. Today at 10:30 CET first quarter Credit Conditions Survey results will be published by the Bank of England. At 11:00 CET February Industrial Production will be released in euro-zone. The tentative outlook is negative.
Asian stocks are gaining today after better-than-expected trade data provided indication of stabilization in the world’s second largest economy: China reported exports rose 18.7 % in yuan terms in March compared to a year earlier, while imports fell only 1.7%. Nikkei gained 2.8% today as weaker yen and positive Chinese trade data boosted exporter stocks. Toyota Motor and Honda Motor both gained more than 2.5%, Panasonic rallied 3.3%.
Oil futures prices are retreating today on concerns major oil producers may fail to agree to cut crude oil output. June Brent oil jumped 4.3% to $44.69 a barrel on London’s ICE Futures exchange on Tuesday on speculation that Saudi Arabia and Russia have reached an agreement to stabilize production ahead of a meeting of major oil producers in Qatar this weekend. Saudi oil minister Ali al-Naimi’s comments later indicated that a production cut was out of the question. Investors are waiting for Energy Information Administration report today at 16:30 CET on US official crude oil inventories. Data from American Petroleum Institute industry group late Tuesday showed US crude stocks rose by a larger-than-expected 6.2 million barrels to 536.3 million last week.
Gold is edging lower today after hitting a three-week high of $1262.60 on Tuesday.