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While you were sleeping: Oil rallies

Tuesday 16th May 2017

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Wall Street advanced, sending the S&P 500 and the Nasdaq to record highs, as oil prices climbed after the world’s top producers suggested they’re looking to extend a deal on global output cuts. 

Oil futures rallied as Saudi Energy Minister Khalid Al-Falih and his Russian counterpart, Alexander Novak, met in Beijing and said that an agreement on production cuts should be extended through the first quarter of 2018. 

"When Saudi Arabia and Russia come out together it sends a very strong signal to the market," Mike Wittner, head of commodities research at Societe Generale in New York, told Bloomberg. "With these two countries behind the extension of the accord, chances are very high that they will get all of OPEC behind it.”

Wall Street advanced, too. In 3.04pm trading in New York, the Dow Jones Industrial Average gained 0.35 percent, while the Nasdaq Composite Index rose 0.37 percent. In 2.481pm trading, the Standard & Poor’s 500 Index added 0.39 percent.

"The rebound in oil prices and lack of bad news on the geopolitical front have led to a bit of a relief rally in equities," Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas, told Reuters.

"At this level, there isn't too big a correlation between oil and equities but since we've seen oil fall quite a bit in a month or so, today's rally in oil is helping the market grind higher,” Frederick noted.

The S&P 500 touched a record high 2,404.05, while the Nasdaq reached a record 6,153.04.

Gains in shares of Johnson & Johnson and those of Cisco, both up 2.7 percent recently, led the Dow higher. Bucking the trend were shares of Verizon and those of General Electric, recently down 1.2 percent and 0.9 percent respectively.

Meanwhile, shares of Yum China fell in New York, trading 1.6 percent weaker as of 2.56pm, after the operator of KFC, Pizza Hut and Taco Bell in China said it agreed to buy a controlling stake in Daojia, an online food delivery service provider. 

The transaction is expected to close by the end of this month, Yum China said in statement, which did not provide details of the terms.

Daojia, which also operates Sherpa's, focuses on higher-end orders in large cities in China including Beijing, Shanghai, Guangzhou and Shenzhen, Yum China said, adding that Daojia founder Hank Sun will continue to lead the business. 

"Digital and delivery are long-term strategic drivers of our business, and I am pleased to build on our technological know-how and capabilities in this high growth area," Micky Pant, CEO of Yum China, said in the statement. 

In Europe the Stoxx 600 Index ended the day with a 0.1 percent gain from the previous close. France’s CAC40 Index increased 0.2 percent, while Germany’s DAX Index and the UK’s FTSE 100 Index each rose 0.3 percent.

 

 

 

 

(BusinessDesk)

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