Saturday, October 1, 2022

Oil price jump on US inventories slide boosts stocks

Oil price jump on US inventories slide boosts stocks

SINGAPORE - Asian stocks rose early on Thursday, getting a lift from a record high close on MSCI's global stocks benchmark after strong gains in oil prices buoyed energy stocks globally.

Oil prices held on to 3 percent-plus overnight gains, their biggest one-day jump since Dec. 1, following a steep drop in US inventories and support from Iraq and Algeria for an extension to OPEC supply cuts.

US crude rose 0.1 percent to $47.41 a barrel in early trade on Thursday, although some market watchers warned the gains in prices may be short-lived given stubbornly high US production.

"US crude oil production is now solidly above 9.3 million barrels per day with more to come, and refined product, especially for gasoline, is oddly weak," said John Kilduff, partner at hedge fund Again Capital in New York.

"It is difficult to see how the ... gains last."

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 percent early on Thursday, while Japan's Nikkei advanced 0.2 percent.

MSCI's global stock benchmark advanced 0.2 percent to a record high close overnight, bolstered by an almost 1 percent jump in energy shares.

On Wall Street, the S&P 500 and the Nasdaq closed about 0.1 percent higher, while the Dow Jones Industrial Average ended the day almost 0.2 percent lower.

"Global equities, led by the S&P 500 are moving higher, but at a very subdued pace," Chris Weston, market strategist at IG in Melbourne, wrote in a note.

Political tensions in the US also capped Wall Street gains, as the fallout from the sudden firing of FBI Director James Comey on Tuesday sapped confidence in US President Donald Trump's economic agenda.

Democrats intensified accusations that Comey's removal was intended to undermine the FBI probe into possible collusion between Trump's presidential campaign and Russia to sway the 2016 election and demanded an independent investigation into the alleged Russian meddling.

The dollar remained resilient, lifted by rising risk appetite and rising US Treasury yields after a soft 10-year note auction.

The dollar was slightly higher at 114.30 yen early on Thursday, following four straight sessions of gains. It hit a near-two-month intraday high on Wednesday.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, was also marginally higher at 99.692.

The New Zealand dollar slumped 1.6 percent to $0.6832, its biggest one-day loss since June 2016.

The fall came after the central bank held its benchmark rate steady at 1.75 percent and retained its neutral bias, disappointing economists who expected it would lean toward tightening monetary policy in early 2019.

Sterling was fractionally lower at $1.2928, ahead of a Bank of England policy meeting at 1100 GMT, at which the central bank is expected to leave rates unchanged at a record low 0.25 percent.

Governor Mark Carney is expected to say he wants more clarity before the first interest rate hike in nearly a decade, even though inflation is running above the central bank's 2 percent target.

The Canadian dollar weakened 0.4 percent, with the US dollar buying C$1.3709 after Moody's Investor Service downgraded six Canadian banks, citing a more challenging operating environment. The euro was steady at $1.08665. Gold pulled back as the dollar inched higher. Spot gold slipped 0.1 percent to $1,217.97 an ounce. -Reuters