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Category: Futures / Markets / Stockmarket / Currency

US shares jump on crude awakening and retail therapy

Friday, 12 Aug 2016 06:43:28 | Rebecca Hyam Rebecca Hyan And Michael Janda

Investors were buying stocks overnight, with the Dow Jones up 0.6 per cent. (Getty/AFP: Spencer Platt)

Rising oil prices and surprisingly strong financial results from some major US department stores saw Wall Street hit fresh record highs overnight.

Markets at 8:10am (AEST):

  • ASX SPI 200 futures +0.6pc to 5,498
  • AUD: 77 US cents, 59.4 British pence, 78.5 Japanese yen, 69.15 euro cents, $NZ1.068
  • US: Dow Jones +0.6pc to 18,614, S&P 500 +0.5pc to 2,186, Nasdaq +0.5pc to 5,228
  • Europe: Euro Stoxx 50 +1pc to 3,049, FTSE 100 +0.7pc to 6,915, DAX +0.9pc to 10,743
  • Commodities: Brent crude +4.3pc to $US45.95 a barrel, iron ore -1.8pc $US59.60 a tonne, gold -0.6pc to $US1,338 an ounce

Crude oil surged around 5 per cent on comments from the Saudi oil minister about potential action to stabilise prices, and the International Energy Agency's forecast that crude markets would rebalance in the coming months.

"The rally in equities was sparked by the move higher in oil prices following comments from Saudi Arabia's energy minister saying that the kingdom could participate in co-ordinated action to help balance the oil market," noted NAB's Rodrigo Catril.

Mr Catril also observed that the markets appear to be partying like its 1999, to borrow a phrase from the late, great Prince.

"Curiously, however, the Dow Jones, S&P500 and Nasdaq closed the century making new record highs [on the last trading day of 1999]," he said.

Today, sixteen years and 225 days later all thee indices have done it again, closing simultaneously at new record highs.

Shares in department store Macy's jumped 18 per cent, after it reported a smaller-than-forecast fall in quarterly comparable store sales, and said it would close 100 stores.

The share price surge marked the best day for Macy's in almost eight years.

Fellow department store chain Kohl's reported a quarterly profit, which beat analysts' estimates, sending its shares 17 per cent higher.

'Almost insurmountable pressure' to cut rates

European markets performed well, assisted by Zurich Insurance group revealing that profits fell less than expected.

Australian shares are on track to rise at the open, before attention turns to some Chinese economic data around midday.

The Australian dollar was worth around 77 US cents, having eased very slightly overnight.

ANZ analysts noted, after yesterday's failed attempt by New Zealand's central bank to lower the Kiwi dollar, that it is becoming almost impossible for central banks to appease investors.

"In a world of ultra-stimulatory central bank policies pulling global yields lower, there is almost insurmountable pressure for local policy to fall too, else risk an even stronger currency and weaker tradable inflation," ANZ observed.

Today's agenda:

Australia:
  • James Hardie Q3 trading update (TBC)

China:
  • Industrial production – July (12:00pm AEST)
  • Fixed asset investment – July (12:00pm AEST)
  • Retail sales – July (12:00pm AEST)

Europe:
  • GDP growth – Q2 (7:00pm AEST)
  • Industrial production – June (7:00pm AEST)

US:
  • Retail sales – July (11:30pm AEST)
  • Business inventories – June (11:30pm AEST)

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