While you were sleeping: Oil boosts stocks
Oct. 11 (BusinessDesk) - Equities on both sides of the Atlantic rose with the price of oil after Russia signalled it will join an agreement to curb oil output.
Many oil producers outside OPEC have expressed a willingness to cooperate on output caps, said Saudi Arabia’s Energy and Industry Minister Khalid Al-Falih at an energy congress in Istanbul, according to Bloomberg. He added that he was “optimistic” there’ll be a deal that could lift prices as high as US$60 by year-end.
"Russia is ready to join the joint measures to cap production and is calling for other oil exporters to join," Russian President Vladimir Putin said in Istanbul, according to Reuters.
Oil prices rallied, with Brent touching US$53.73 a barrel, the highest level in a year, in London.
"Putin coming out to say Russia will be part of the initiative has added another layer of credence to the speculation there will be a coordinated cut," John Kilduff, partner at New York energy hedge fund Again Capital, told Reuters.
"At some point, the market will call them on it and say 'show us the cuts’,” Kilduff noted. “And at that point, the Saudis might be willing to underwrite the cuts on their own because they really want these high prices. To me, US$55 Brent is without doubt the next target," he said.
Wall Street and energy stocks followed suit. In 2.07pm trading in New York, the Dow Jones Industrial Average gained 0.6 percent, while the Nasdaq Composite Index climbed 0.8 percent. In 1.52pm trading, the Standard & Poor’s 500 Index rose 0.5 percent.
The Dow advanced as gains in shares of Apple as well as those of Exxon Mobil and Chevron, recently up 2.1 percent, 2.1 percent and 1.9 percent respectively, outweighed slides in shares of Wal-Mart and those of Procter & Gamble, recently down 1.2 percent and1 percent respectively.
In Europe, the Stoxx 600 Index finished the day with a gain of 0.7 percent, bolstered by advances in energy stocks. The UK’s FTSE 100 Index increased 0.8 percent, France’s CAC 40 Index rose 1.1 percent, while Germany’s DAX Index added 1.3 percent.
“Russia’s comments on supporting an OPEC deal are creating positive sentiment,” Samy Chaar, chief economist at Lombard Odier in Geneva, told Bloomberg.
A perception that Democratic US Presidential candidate Hilary Clinton won the second debate with Republican candidate Donald Trump, securing her chances to win, helped underpin the mood on financial markets.
Investors are gearing up for a fresh round of US quarterly earnings, with Alcoa set to report on Tuesday.
Meanwhile, shares of Twitter sank further, down 13.3 percent as of 2.24pm in New York, amid reports that it has failed to attract any potential bidders.