Stocks Rise on Higher Oil Price, Greek Debt Relief Deal
May 25 2016 - 8:53AM
Dow Jones News
By Riva Gold
Global stocks marched higher Wednesday as rising oil prices and
the prospect of a Greek debt deal helped extend a rally after weeks
of listless trade.
The Stoxx Europe 600 climbed 1.1% to its highest level this
month, following steep gains in Japan and Hong Kong.
Futures pointed to a 0.4% opening gain for the S&P 500.
Changes in futures don't necessarily reflect market moves after the
opening bell.
Technology and financial stocks led the S&P 500 to its
biggest jump in more than two months on Tuesday, amid strong U.S.
housing data and growing confidence that the economy could
withstand a possible summer interest rate rise.
"People are realizing that rates going up is not a negative for
the longer term economy -- it's a positive vote of confidence that
things are going better than people hoped," said JJ Kinahan, chief
strategist at TD Ameritrade.
That rally continued Wednesday, with banks and energy companies
among the biggest gainers in Europe.
U.S. crude oil prices gained 1% to $49.11 a barrel, near their
highest level in more than seven months.
Oil prices got a lift from expectations that production
disruptions would help reduce a supply glut and after industry
group API reported a surprisingly large drawdown in U.S. crude
supplies. Official U.S. production and stockpiles data will be
released later Wednesday by the Energy Information
Administration.
"We have a stabilizing oil price, and that is comforting to the
very distressed sectors associated with energy," said Sandra Crowl,
member of the investment committee at French asset manager
Carmignac.
Also boosting shares, eurozone finance ministers and the
International Monetary Fund reached a deal early Wednesday that
clears the way for fresh loans for Greece and prevents the country
from defaulting on big debt redemptions in July.
Greek government bond yields fell below 7% for the first time
since November before retracing slightly. Yields in Spain,
Portugal, Italy and Spain also fell. Yields fall as prices
rise.
Analysts said the deal reduced the risk of a summer crisis, but
fell short of a long term solution to the country's debt.
"The partial agreement in Greece is positive," said Ms. Crowl,
but "markets will remain volatile because of a lack of a visibility
both in growth and in political events."
Despite the recent gains, many investors aren't convinced they
will see great returns this year in a sluggish global economy with
uncertain monetary policy. Stocks have struggled for traction in
recent weeks, with the S&P 500 locked in a tight trading
range.
"We're going into a period of uncertainty," said Patrick George,
global head of equities at HSBC.
"Big investors are sitting on the sidelines, waiting," he said,
adding that international investors have been shy of investing in
Europe because of uncertainty over what shape it will have after
June 23, when the U.K. holds a referendum on membership in the
European Union.
Earlier, Japan's Nikkei Stock Average added 1.6%, while Hong
Kong's Hang Seng Index gained 2.7% and shares in Australia gained
1.5%, bolstered by the rise in oil prices and strong finish on Wall
Street.
Shares in Shanghai ended slightly lower, however, after China
guided the yuan to its weakest level against the dollar in over
five years.
The euro was little changed against the dollar at $1.1138
despite data showing an unexpected improvement in German business
confidence.
The dollar was up 0.2% against the yen at Yen110.2380, while the
British pound gained 0.5% against the dollar to $1.4685.
In metals, gold prices in London fell slightly to a seven-week
low and last traded at $1,223.45 an ounce. Copper futures in London
were up 0.8% at $4,621.50 a ton.
In corporate news, shares in Bayer AG edged up 0.1% following
Monsanto's rejection of its $62 billion takeover offer.
Marks & Spencer Group PLC shares slid nearly 9% after the
company reported a steep fall in pretax profit and warned of more
pressure ahead.
Viktoria Dendrinou
contributed to this article
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
May 25, 2016 08:38 ET (12:38 GMT)
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