Jump In Oil Prices May Lead To Strength On Wall Street

Jump In Oil Prices May Lead To Strength On Wall Street

The major U.S. index futures are pointing to a higher opening on Wednesday after stocks ended the previous session roughly flat.

A sharp increase by the price of crude oil may contribute to strength on Wall Street following President Donald Trump’s decision to withdraw from the Iran nuclear deal.

Stocks saw a negative bias throughout much of the trading session on Tuesday before ending the day roughly flat. The major averages closed near the unchanged line after recovering from the lows set in afternoon trading.

The major averages all ended the day showing moves of less than a tenth of a percent. While the S&P 500 edged down 0.71 points to 2,671.92, the Dow inched up 2.89 points to 24,360.21 and the Nasdaq crept up 1.69 points to 7,266.90.

The lackluster close by the major averages came following Trump’s announcement of his controversial but widely expected decision to withdraw from an international agreement intended to limit Iran’s nuclear program.

Trump harshly criticized the nuclear agreement with Iran in remarks from the White House and signed a memorandum re-imposing sanctions on Iran.

“I am announcing today that the United States will withdraw from the Iran nuclear deal,” Trump said. “We will be instituting the highest level of economic sanctions.”

“The United States no longer makes empty threats,” added Trump, who criticized the deal throughout his presidential campaign. “When I make promises, I keep them.”

The agreement negotiated under former President Barack Obama involved the U.S. and Iran as well as China, France, Russia, the U.K., Germany and the European Union.

Trading activity on the day was somewhat subdued, as a lack of major U.S. economic data kept some traders on the sidelines.

Utilities stocks turned in some of the market’s worst performances on the day, resulting in a 2.4 percent slump by the Dow Jones Utilities Average.

Considerable weakness was also visible among telecom stocks, as reflected by the 1.6 percent drop by the NYSE Arca North American Telecom Index.

On the other hand, energy and banking stocks saw notable strength, offsetting the weakness seen in the aforementioned sectors.

Commodity, Currency Markets

Crude oil futures are spiking $1.68 to $70.74 a barrel after plunging $1.67 to $69.06 a barrel on Tuesday. Meanwhile, after edging down $0.40 to $1,313.70 an ounce in the previous session, gold futures are slipping $1.60 to $1,312.10 an ounce.

On the currency front, the U.S. dollar is trading at 109.69 yen compared to the 109.13 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1881 compared to yesterday’s $1.1864.

Asia

Asian stocks ended mixed on Wednesday as investors kept an eye on movements in the oil and forex markets following U.S. President Donald Trump’s decision to withdraw from the Iran nuclear deal.

Chinese shares ended marginally lower, dragged down by financials and property developers. The benchmark Shanghai Composite Index edged down 2.68 points or 0.1 percent to 3,158.81. Meanwhile, Hong Kong’s Hang Seng Index rose 133.33 points or 0.4 percent to 30,536.14.

Japanese shares fell as traders grappled with the ramifications of Trump pulling the U.S. out of the landmark nuclear deal with Iran, with some analysts saying the upcoming talks with North Korean leader Kim Jong Un might be weighing on Trump.

The benchmark Nikkei 225 Index shed 99.81 points or 0.4 percent to close at 22,408.88, while the broader Topix Index closed 0.4 percent lower at 1,772.91.

Takeda Pharmaceutical lost 2.4 percent after it agreed to buy Irish rival Shire for 45.3 billion pounds ($62 billion). Daiichi Sankyo shed 3.8 percent and Eisai dropped 1.5 percent.

Toyota Motor rallied 3.8 percent to hit a three-month high after it posted an improved quarterly profit and announced a share buyback.

Australian shares eked out modest gains after Treasurer Scott Morrison said in the budget for 2018-19 that Australia will return to a surplus a year earlier than previously forecast.

The benchmark S&P/ASX 200 Index rose 16.10 points or 0.3 percent to 6,108.00, while the broader All Ordinaries Index ended up 21.20 points or 0.3 percent at 6,204.40.

Commonwealth Bank of Australia tumbled 2.8 percent after the bank posted weaker-than-expected revenue for the third quarter and said its customer home loan repayments more than 90 days late were on the rise.

Santos jumped 3.3 percent, Woodside Petroleum added 1.2 percent and Oil Search advanced 1.3 percent after U.S. oil prices rose more than 2 percent to a three-and-a-half year high in Asian trading.

Explosives and fertilizer manufacturer Incitec Pivot lost 5.3 percent after its first-half profit fell 95 percent on impairment charges. Plumbing group Reece soared 14 percent as shares came out of a trading halt after a capital increase.

Europe

European stocks have turned mixed on Wednesday as rallying oil prices have helped lift energy stocks and investors remained hopeful that the Iran nuclear deal will remain partially intact, even without the United States.

While the U.K.’s FTSE 100 Index is up by 0.5 percent, the German DAX Index is just below the unchanged line and the French CAC 40 Index is down by 0.1 percent.

Dialog Semiconductor has soared after its underlying net income for the first quarter rose 19 percent from last year. Siemens has also jumped after lifting its full-year profit guidance.

Vodafone Group has rallied on news the telecommunications conglomerate has entered into a definitive agreement to buy operations in four European countries from John Malone’s Liberty Global.

Provident Financial has also moved sharply higher. The sub-prime lender said that each of the group’s three businesses has started 2018 with positive momentum and the company is on track to deliver results for 2018 in line with internal plans.

Tobacco firm Imperial Brands has advanced after posting half-year results in line with expectations.

Meanwhile, telecommunications firm Deutsche Telekom has moved lower despite posting higher first quarter earnings and raising its outlook for the year.

Consumer goods firm Henkel has also declined. The company’s revenue fell in the first quarter due to negative currency effects and delivery problems in North America.

Eurofins Scientific has dropped after it signed an exclusive agreement to acquire PHAST, one of Europe’s leading service providers in the field of pharmaceutical products quality.

Foodservice company Compass Group has also slumped after its first-half profit declined due to foreign exchange effects.

U.S. Economic Reports

A report released by the Labor Department showed a modest uptick in U.S. producer prices in the month of April.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in April after rising by 0.3 percent in March. Economists had expected prices to edge up by 0.2 percent.

Excluding food and energy prices, core producer prices rose by 0.2 percent in April after climbing by 0.3 percent in the previous month. The increase in core prices matched economist estimates.

The Commerce Department is due to release its report on wholesale inventories in the month of March at 10 am ET. Wholesale inventories are expected to climb by 0.5 percent.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended May 4th.

Crude oil inventories are expected to drop by 0.7 million barrels after jumping by 6.2 million barrels in the previous week.

The Treasury Department is due to announce the results of its auction of $25 billion worth of ten-year notes at 1 pm ET.

At 1:15 pm ET, Atlanta Federal Reserve President Raphael Bostic is scheduled to speak at the World Affairs Council in Jacksonville, Florida.

Stocks In Focus

Shares of TripAdvisor (TRIP) are moving sharply higher in pre-market trading after the travel and restaurant website company reported first quarter results that beat analyst estimates on both the top and bottom lines.

Video game publisher Electronic Arts (EA) may also move to the upside after reporting better than expected fiscal fourth quarter results and announced a $2.4 billion stock repurchase program.

Shares of Match Group (MTCH) are also seeing pre-market strength after the dating website operator reported first quarter results that exceeded expectations and provided upbeat guidance.

On the other hand, shares of Wendy’s (WEN) may move to the downside after the fast food chain reported better than expected first quarter adjusted earnings but weaker than expected same-store sales growth.

Entertainment giant Disney (DIS) is also moving lower in pre-market trading despite reporting better than expected fiscal second quarter results.

Shares of Marriot (MAR) may also see early weakness after the hotel operator reported first quarter earnings that beat estimates but weaker than expected revenues.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

Related posts