While you were sleeping: Oil rebound aids stocks

Wednesday 30th December 2015

Equities advanced on both sides of the Atlantic, while US Treasuries and German bonds declined, as battered oil prices rose.

Oil prices rebounded. West Texas Intermediate crude rose 2.2 percent to US$37.63 a barrel while Brent gained 2.7 percent to US$37.60.

While a respite from the 2015 slump, the outlook for oil remains gloomy.

"Fundamentals remain very bearish," ING Bank analyst Hamza Khan, told Reuters.

Wall Street moved higher. In 12.10pm trading in New York, the Dow Jones Industrial Average climbed 0.9 percent, while the Nasdaq Composite Index added 1 percent. In 11.56am trading, the Standard & Poor’s 500 Index advanced 0.8 percent.

Gains in shares of DuPont and those of Wal-Mart Stores, last 1.9 percent and 1.5 percent stronger respectively, helped bolster the Dow higher. Shares of Walt Disney last traded 0.5 percent lower, for the only drop in the Dow.

“This remains a Teflon market, it has been all year,” Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, told Bloomberg. “There have been plenty of negative headwinds that should’ve had the market significantly lower than it is now. And to be basically unchanged for the year is probably a net win-win for those that have a bullish mentality and bullish expectations for 2016.”

Trading volume was lighter than usual. Financial markets will be closed for the New Year’s Day holiday on Friday.

Shares of Amazon.com rose, last up 2.7 percent, after the company said it added more than 3 million Prime members in the third week of December.

The latest US economic data were better than expected.

The Conference Board's index of consumer confidence rose to 96.5 in December, up from 92.6 on November.

“As 2015 draws to a close, consumers' assessment of the current state of the economy remains positive, particularly their assessment of the job market,” Lynn Franco, Director of Economic Indicators at The Conference Board, said in a statement.

“Looking ahead to 2016, consumers are expecting little change in both business conditions and the labour market. Expectations regarding their financial outlook are mixed, but the optimists continue to outweigh the pessimists.”

Separately, the S&P/Case Shiller composite index of 20 metropolitan areas increased 5.5 percent in October on a year-over-year basis, up from compared with 5.4 percent in the year to September.

US Treasuries slipped but some are optimistic about the year ahead.

“Ten-year US Treasuries are quite attractive because of my outlook for a weakening economy,” Marc Faber, the publisher of the Gloom, Boom & Doom Report, told Bloomberg. “I believe that we’re already entering a recession in the United States” and US stocks will fall in 2016.

In Europe, the Stoxx 600 Index finished the session with a 1.4 percent increase from the previous close. The UK FTSE 100 Index added 1 percent, France’s CAC 40 Index gained 1.8 percent, while Germany’s DAX Index rallied 1.9 percent.

German bonds fell, pushing yields on the benchmark 10-year note six basis points higher to 0.62 percent.

BusinessDesk.co.nz

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