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Friday Jan 05 2018

Stock markets smash records in oil-fueled rally

Traders work on the floor of the New York Stock Exchange (NYSE), New York, November 28, 2017. REUTERS/Brendan McDermid/Files

NEW YORK: World stock markets went on another record-smashing run Thursday fueled by a bright economic outlook and strong oil prices, with Wall Street's Dow index powering past 25,000 for the first time and London also reaching a new record peak.

"It's onwards and upwards for global stock markets," said Lee Wild, head of equity strategy at online stockbroker Interactive Investor.

"With economic data underpinning forecasts for strong global growth in 2018, traders are happy to keep buying risk assets."

The Dow quickly shot past 25,000 soon after the opening bell — and pushed as high as 25,105.96 before retreating a bit — as strong US private-sector hiring data sparked an extension of the stocks rally seen in the wake of last month's US tax reform.

The blue-chip index ended at 25,075.13, up 0.6 percent.

'Brave trader'

"Donald Trump may or may not have the biggest nuclear button in the world, but his country does currently have one of the strongest equity indices," said James Hughes at AxiTrader.

"It's currently a brave trader who bets against the strength in stock markets over the short to medium term as the juggernaut rolls on," he said.

London's benchmark FTSE 100 shares index of top companies also scored a record-high intra-day peak in afternoon trading, hitting 7,702.51 at one point, before paring gains towards the close.

Frankfurt's DAX 30 and the Paris CAC 40 charged higher, with the energy sector jumping on strong crude oil prices, taking both indices around 1.5 percent higher on the day.

"There are further gains for oil shares which continue to ride the coat-tails of a further increase in crude prices to levels not seen since mid-2015," Wild said.

"There have been major outages over the past few months in the North Sea and Libya, and now markets are pricing in an outside chance that domestic tension in Iran could threaten supply."

Iran boosts oil

Oil prices sprang to three-year highs on the back of a big freeze in the United States, tensions between major producers Iran and Saudi Arabia, and a weaker dollar.

Both main contracts jumped around two percent on Wednesday and extended those gains Thursday, albeit at a slower pace.

AxiTrader chief market strategist Greg McKenna said the Iranian protest movement has pushed geopolitics to the forefront.

"My sense is there is some expectation that President Trump may use the protests as a pretext to reimpose sanctions on Iran and possibly unwind the deal the previous administration did which allowed Iran to increase its exports," he said.

"That would take a significant number of barrels per day out of the market."

Data showing falling US oil stockpiles also underpinned the oil price.

Dollar pain

In Asia, Tokyo led another broad rally as soaring oil prices fueled bumper gains for energy firms.

Japan's Nikkei index rose more than three percent higher on its first trading day for 2018 as investors played catch-up with two days of advances elsewhere.

The dollar meanwhile held on to most of the previous day's gains against the yen, but lost more ground against the pound.

"This is certainly shaping up to be another painful trading week for the dollar," observed FXTM analyst Lukman Otunuga. "Bulls were nowhere to be found during Thursday's trading session, despite the release of yesterday's somewhat hawkish Federal Reserve minutes."

Eyes are now on the release of US jobs data on Friday.

Key figures around 0240 PST

New York

DOW: UP 0.6 percent at 25,075.13 (close)

S&P 500: UP 0.4 percent at 2,723.99 (close)

Nasdaq: UP 0.2 percent at 7,077.91 (close)


FTSE 100: UP 0.3 percent at 7,695.88 points (close)


DAX 30: UP 1.5 percent at 13,167.89 (close)


CAC 40: UP 1.6 percent at 5,413.69 (close)

EURO STOXX 50: UP 1.7 percent at 3,563.83


Nikkei 225: UP 3.3 percent at 23,326.06 (close)

Hong Kong

Hang Seng: UP 0.6 percent at 30,736.48 (close)


Composite: UP 0.5 percent at 3,385.71 (close)


Euro/dollar: UP at $1.2070 from $1.2014 late on Wednesday

Pound/dollar: UP at $1.3553 from $1.3515

Dollar/yen: UP at 112.72 yen from 112.52 yen


Oil - Brent North Sea: UP 38 cents at $62.01 per barrel

Oil - West Texas Intermediate: UP 23 cents at $68.07 per barrel


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