Week 8, 2016
Oil advanced a second day, rising briefly above $30 a barrel in New York for the first time in almost a week.
West Texas Intermediate futures rose 1.1 percent in electronic trading in New York after surging 12 percent on Friday. Speculators’ long positions in WTI through Feb. 9 rose to the highest since June, according to data from the U.S. Commodity Futures Trading Commission. Iran loaded its first cargo to Europe since international sanctions ended, while Chinese crude imports eased from a record.
What’s Happening in the Markets this week
- Draghi’s Knack for Market Turnarounds on Review as Doubt Grows. It used to be that dropping a hint of imminent stimulus was all that Mario Draghi needed to move financial markets in the direction of his choosing. Investors will find out on Monday if that’s still his game when the ECB president appears before European Parliament.
- Global Stocks Extend Rebound. A rebound in global stocks gained traction amid speculation losses that triggered a bear market were excessive. The Stoxx Europe 600 Index was headed for its biggest two-day advance in more than four years, while the MSCI Asia Pacific Index jumped the most since 2009 as Japan’s Topix soared 8 percent.
Commodities in Review
- West Texas Intermediate rose after earlier falling as much as 1.7 percent. Iran loaded its first cargo to Europe since international sanctions ended, while Chinese crude imports in January fell almost 20 percent from a record in the previous month.
- Copper rallied with other metals after China’s central bank chief stepped up efforts to restore stability to the nation’s currency and economy.
- U.S. Futures Rally With Asia Stocks as Sell-off Seen as Overdone. U.S. index futures rallied as Japanese stocks soared the most since 2008 amid speculation a selloff that brought global equities into a bear market has gone too far. Contracts on the Standard & Poor’s 500 Index due in March jumped 0.9 percent to 1,874.75 as of 1:45 p.m. in Tokyo.
- The global rally started Friday with U.S. stocks halting a five-day decline, its longest losing streak since September, as crude prices rebounded and data showed retail sales increased for a third month in January. The S&P 500 rose 2 percent while the Stoxx Europe 600 jumped 2.9 percent.
- U.K. Rate Cut? 10% Risk for Economists at Odds With Markets. There’s only a 10% chance the Bank of England chief and his officials will cut the benchmark rate from its record-low 0.5%, according to Bloomberg’s monthly survey of economists.
- It’s a stand squarely at odds with interest- rate futures markets, which are pricing a more than 60% possibility. This week’s slew of U.K. data on prices and wages may help narrow the divide. Official statistics point to a slowdown but not another recession as cheap borrowing costs and record employment keep consumers spending.
- Banks’ Surge Takes Europe’s Stock Rally Into 2nd Day. The optimism that swept through European equities entered a second day as lenders further rebounded, while investors bet on additional central-bank stimulus. The Stoxx Europe 600 Index climbed 2.8% at 9:46 a.m. in London, taking its two-day gain to 5.8%, the most since 2011.
- Italian and Greek lenders led a bank rally, while the region’s automakers advanced, helped by a weakening euro. European equities rallied the most in three weeks on Friday, after hitting their lowest prices since 2013, as banks, miners and energy producers surged at least 5.5%.
- Indian Stocks Jump After Worst Week in 6 Years as Asia Rebounds. Indian stocks rebounded from its worst week since 2009 as regional markets rallied amid speculation losses that pushed global equities into a bear market were excessive.
- Asian stocks rallied from the lowest level since 2012, led by a surge in Japanese shares amid speculation policy makers will boost stimulus efforts. Chinese shares fell as markets reopened after the New Year’s holiday.
- Emerging Stocks Rebound on Stimulus Bets as Currencies Advance. Emerging-market stocks rebounded after their worst weekly drop in a month and currencies rallied amid speculation authorities from Europe to Japan will increase stimulus to stabilise global economic growth.
- The MSCI Emerging Markets Index jumped 1.8% to 724.17 at 8:18 a.m. in London, after dropping 3.8% last week. The emerging markets index has lost 8.8% this year and valued at 10.3 times its 12-month estimated earnings. That compares with the MSCI World Index which dropped 9.5% and traded at a multiple of 14.4.
- A separate MSCI gauge of global equities capped a 20% slide from a May record last week as the Fed acknowledged the volatility around the world and singled it may delay further monetary tightening.
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