IFC Markets - Analytics

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    Rising oil shares support markets

    US stocks extended gains on Tuesday as rising energy shares pushed up the main indexes. The dollar strengthened against most major currencies on expectations of interest rate increase. The ICE dollar index, a measure of the dollar’s strength against a basket of six currencies, rose 0.3% to 97.17. The S&P 500 gained 0.27% to 2,109.79. Energy companies were best performers on the S&P 500. Diamond Offshore Drilling Inc. gained 6.3% and Pioneer Natural Resources Co. rallied 6.6%.The Dow Jones Industrial Average rose 0.5%, led by Chevron and Exxon Mobil. In economic news monthly auto sales rose to a 10-year high in October as lower gasoline prices increased the demand for larger cars. General Motors gained 0.6% while Ford Motor shares rose 0.4%. Factory Orders report showed a 1.0% decline for September. The report indicated new orders for durable goods declined 1.2%, with durable goods orders excluding transportation falling 0.6%. Today at 13:00 CET Mortgage Applications will be released in US. At 14:00 CET Federal Reserve Bank of Philadelphia President Patrick Harker will speak at an event in Philadelphia. At 14:15 CET October Employment Change will be released by ADP Inc. The tentative outlook is positive. At 14:30 CET September Trade Balance will be published. The tentative outlook is positive. At 15:45 CET final Services and Composite PMIs for October will be released by Markit. And at 16:00 CET October Non-Manufacturing PMI will be released by ISM. The tentative outlook is positive. At the same time Fed Chair Yellen will testify on bank regulation before the House Financial Services Committee.

    European stocks closed higher on Tuesday after a weak start as shares of oil companies rose on the back of rebounding oil prices. The Stoxx Europe 600 rose 0.4%. Advances in oil companies underpinned the market. Shares of Tullow Oil PLC jumped 18% on the news a new project with a partner company in Ghana is planned to start producing oil in 2016. Shares of BP PLC rallied 3.9%, France’s Total SA gained 3.6% and Royal Dutch Shell PLC rose 2.9%. Germany’s DAX 30 ended flat at 10,951.15 as shares of Volkswagen fell 1.5% after US Environmental Protection Agency said it was now looking at 3.0-litre V6 diesel engines in some Volkswagen, Audi and Porsche vehicles. Banking sector shares were subdued after release of weak earnings from Standard Chartered and UBS. Today from 9:45 -10:00 CET final readings of October Services and Composite PMIs for France, Germany and euro-zone will be released. The tentative outlook is neutral. At 11:00 CET September Producer Price Index will be released in euro-zone. The tentative outlook is negative. At 10:00 CET European Central Bank president Mario Draghi delivers opening remarks at the ECB Forum on Banking Supervision, in Frankfurt.

    Nikkei rose 1.3% today as risk appetite returned with gains on Wall Street and a successful $12 billion initial public offering of three Japan Post shares. Shares of group parent company Japan Post Holdings closed 20% higher than the initial public offering price. Exporters rose also with Honda Motor gaining 1.9% and Nissan Motor rallying 2.6%.

    Oil futures quotes are sliding today on profit taking after solid gains on Tuesday on concerns over supply disruptions in Libya and Brazil. December Brent crude rose 3.6% to settle at $50.54 a barrel. Traders are waiting for official inventory data from the US Energy Information Administration at 16:30 CET today.

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