The S&P 500 .SPX, the Dow .DJI and Nasdaq .IXIC all closed at historic highs on Thursday for the first time since 1999 on higher crude oil and upbeat corporate results. Others also noted that oil prices were driving the gains in equity markets. "Oil has been at the heart of the move, helping high yield credit spreads to narrow relative to U.S. treasuries and put real backbone behind the feel good factor," one analyst reported.
In Asia trade, oil prices extended their overnight rebound, with U.S. crude futures up 0.4 percent at $43.89 a barrel after jumping 4.3 percent overnight. Global benchmark Brent added 0.63 percent to $46.33 after climbing 4.5 percent overnight. Hong Kong shares .HSI rose 0.7 percent and were at their highest in more than eight months. South Korea's Kospi .KS11, which touched the highest level since July 2015, was little changed. Australian stocks gained 0.3 percent. Japan's Nikkei .N225 rose 0.7 percent on a slightly weaker yen, and is poised to end the week 3.7 percent higher.
Some analysts referred to the moves as risk on again trades as investors try to figure out what's next for these markets. Reuters noted: “In the short-term, there is elevated risk downside due to high valuations, especially if earnings in the second half of the year do not rebound. But there is still some momentum chasing among investors that has driven markets to records recently,” one observer said.
The gains were supported by weekly jobless claims, which pointed to continued low levels of layoffs, while both import and export prices inched up despite a decline in fuel costs, suggesting a possible pick up in inflation. The Federal Reserve has been looking at a return of healthy levels of inflation—but low crude-oil costs have stymied that—to determine when to raise interest rates.
Still one caveat is the paucity of insider buying which fell 44% from a year ago, the lowest level on record, with directors and CEOs in July buying their own shares fell to just 316.
No comments:
Post a Comment