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Category: Stockmarket / Currency / Futures / Markets / Oil and Gas

Wall St rebounds on crude oil jump

Thursday, 4 Feb 2016 05:48:13 | Thuy Ong

Wall Street was on the up after a strong rebound in crude oil prices. (Chip East, file photo: Reuters)

Wall Street bounced back from the red in late trade, clawing back losses as energy shares climbed on the back of a jump in oil prices.

Key points

  • Oil prices rally by between 8-9 per cent
  • Energy stocks lead US S&P 500 index 0.5 per cent higher
  • Australian dollar rises to 71.8 US cents on US dollar weakness

Oil prices rallied 8 per cent, snapping a two-day rout with investors taking advantage of a weaker US dollar.

West Texas crude bounced 8 per cent to $US32.24 a barrel.

Investors were hopeful after comments from Russia's foreign minister, Sergei Lavrov, who said the major producer would be willing to meet to discuss reducing oil output if there is consensus between members of the Organisation of the Petroleum Exporting Council (OPEC) and non-OPEC members to meet.

Players in the market remain jittery, however, after US data showed the economy's service sector expanded at a slower-than-expected rate in January.

The Dow Jones Industrial Average climbed 1.1 per cent to 16,337.

The S&P 500 rose 0.5 per cent to 1,913, while the Nasdaq bucked the trend, falling 0.3 per cent to 4,504.

Overnight, European markets dropped.

In London, the FTSE 100 lost 1.4 per cent to 5,837, the German DAX dropped 1.5 per cent to 9,435, while France's CAC 40 shed 1.3 per cent to 4,227.

Locally, shares are set to follow Wall Street's lead, the ASX SPI 200 gained 0.7 per cent to 4,856.

What has transpired is one of the most amazing one-day moves in oil we will ever see.

Chris Weston, IG chief market strategist

Tabcorp will report its first half results, while Macquarie Group is set to give a third quarter earnings update later in the day.

Checking currencies, the Australian dollar has rallied 2 per cent to be worth 71.8 US cents.

It was buying 84.5 Japanese yen, 49.1 British pence, 64.6 euro cents and $NZ1.076.

IG chief market strategist Chris Weston said the Australian dollar's gain was due to "ferocious" selling in the US dollar, which is likely behind the share market rebound on Wall Street as well.

"If we want to see a circuit breaker for these markets, it has to come from a weaker US dollar and that seemingly means it must come from a move higher in oil," he wrote in a note previewing the Asian market open.

"What has transpired is one of the most amazing one-day moves in oil we will ever see, with US and Brent oil rallying 9 per cent and 8 per cent from yesterday's ASX 200 close.

"The US dollar has been taken to the cleaners and the falls took place well before we saw US services ISM data or ADP payrolls."

On commodities markets, spot gold jumped 1.1 per cent to $US1,143 an ounce, while spot iron ore hit $US44 a tonne in Tianjin, China.

AustraliaPlus


 

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