Week 12, 2016

Here’s something interesting from the Bloomberg website – The top of the oil market may be closer than you think.

With Brent futures having bounced back to $40 a barrel, the International Energy Agency sees “light at the end of the tunnel,” and Goldman Sachs Group Inc. is spotting “green shoots.” Even so, many analysts warn that, like the failed rally last year, this recovery will sputter once prices go high enough to keep U.S. crude flowing.

What’s Happening in the Markets this week

• Stocks Rally Before BOJ, Fed Meetings; Aussie Declines With Oil. Stocks rose in Asia and Europe, extending a global rally before central banks in two of the world’s three biggest economies review policy this week. Australia’s dollar led declines among commodity currencies as oil fell.
• Japan’s Biggest Gold Retailer Says Negative Rates Boost Demand. Japan’s negative interest rates are boosting demand for gold, according to the nation’s biggest bullion retailer. International prices have rallied 18 percent this year as investors seek a haven from financial market turmoil.

Commodities in Review

• Shale Patch Pain Sees Speculators Boost Bets on Oil Price Rise. Hedge funds are the most bullish on oil in almost a year as the U.S. shale boom unravels and demand for gasoline strengthens.
• Gold is heading for a third straight monthly gain. There seems to be almost nothing that will deter this year’s newfound gold enthusiasm. Even with a turnaround in global equities and signs of a more robust U.S. economy, investors are still piling into the metal. Money managers are holding the biggest net-wager on a rally in more than a year.

USA

• There’s Only One Buyer Keeping the S&P 500’s Bull Market Alive. Demand for U.S. shares among companies and individuals is diverging at a rate that may be without precedent, another sign of how crucial buybacks are in propping up the bull market as it enters its eighth year. Standard & Poor’s 500 Index constituents are poised to repurchase as much as $165 billion of stock this quarter, approaching a record reached in 2007.

UK

• U.K. Stocks Jump as Rebound in Banks, Miners Lift FTSE 100 Index. U.K. stocks rallied on Friday, trimming the week’s decline, after the FTSE 100 slipped the most in a month on Thursday. The FTSE 100 Index climbed 1.7% to 6,139.79, rebounding from a Feb. 25 low. The benchmark’s 1% drop last week was its first weekly decline in four. The gauge has lost 1.6% this year, less than its regional peers.

Europe

• European Stocks Rise a Second Day, Heading Toward Two-Month High. The Stoxx Europe 600 Index rose 0.9% at 8:09 a.m. in London, with more than 560 of its companies climbing. Germany’s DAX Index was among the biggest gainers in western Europe, up 1.7% thanks to a jump in carmakers. European stocks have rebounded 13% from last month’s low through Friday, with commodity producers and banks leading the gains.
• After a mixed initial response to the European Central Bank’s increased stimulus, the Stoxx 600 erased weekly losses on Friday to post its longest streak of weekly advances in a year.

Asia

• Asian Stocks Rise to Two-Month High Before Central Banks Meet. Asian stocks rose for a third day, with the regional benchmark index heading for a two-month high, led by Shanghai and Tokyo shares ahead of policy reviews by the Bank of Japan and the U.S. Federal Reserve.
• The MSCI Asia Pacific Index climbed 0.9% to 127.92 as of 5:08 p.m. in Tokyo, poised for the highest close since Jan. 5.

Emerging Markets

• Emerging Assets Gain With Brent as China Pledges Market Support. Emerging markets extended a two-week rally as Brent crude held gains and Chinese officials reaffirmed support for the nation’s equities and said there’s no basis for the yuan to weaken.
• The MSCI Emerging Markets Index was poised for its first monthly advance since October, with energy stocks leading gains in its 10 constituent industry groups.