Further three-month highs for global stock markets on Wednesday as investors continued to ignore weak economic data and the protests and political instability impacting America.
Investors preferred to focus on their belief that major economies were near the bottom and that V-shaped recoveries were close – a situation that will not happen anywhere soon.
Oil steadied, gold fell with a slightly weaker US dollar and the Australian market traded up a solid 68 points just before 7 am, although that was down from the night’s highs above 70 points.
Either way, the ASX looks like starting with another solid gain after Wednesday’s 1.8%, 106 point surge.
The Aussie dollar’s charge towards 70 US cents stalled in early Asian dealings Thursday – the currency dipping back from around 69.80 US cents to closer to 69 cents.
Iron ore prices also steadied with the big gains disappearing. The price of 62% Fe fines delivered to northern China eased 1o cents to $US101.22 a tonne – still one of the highest closes for the year so far.
The Dow rose 527.24 points, or 2.05%, to end at 26,269.89, the S&P 500 gained 42.05 points, or 1.36%, to finish at 3,122.87 and the Nasdaq added 74.54 points, or 0.78%, to 9,682.91.
The Nasdaq 100 is now just over 0.1% below its February record, having briefly breached that level late in Wednesday’s session. Investors are ignoring the fact that earnings from these tech giants like Amazon, Facebook, Alphabet, Apple, and Microsoft will all take a big hit this quarter and next.
They also ignored the looming weekly report on jobless claims and Friday’s employment/jobless report for May which will show another big rise.
Helping sentiment was another, smaller rise in US oil prices.
US oil futures Wednesday closed higher, extending a move around the highest level since early March.
That was despite confusion about whether a meeting of OPEC members and other major producers led by Russia, would take place tonight, as planned.
Reuters and Bloomberg both claimed a deal had been done to extend the current 9.7 barrels a day production cut to the end of July and not September, as some countries had wanted (Saudi Arabia).
But other media reports claimed the meeting would not happen and would now take place next week.
Weekly falls in US crude stockpiles and supplies at the Cushing, Oklahoma storage hub reported by the Energy Information Administration on Wednesday didn’t help prices because stocks of petrol, diesel, and other products jumped sharply, indicating demand is not solid.
West Texas Intermediate crude for July delivery added 48 cents, or 1.3%, to settle at $US37.29 a barrel in New York rising 3.9% on Tuesday.
In Europe, the global benchmark Brent saw a 22 cents or 0.6%, rise in its front-month contract to end at $US39.79 a barrel. That was after the 3.3% jump on Tuesday.
Prices for WTI and Brent crude front months were the highest since March 6.
Reuters reported that Saudi Arabia and Russia had reached a preliminary agreement to extend existing cuts by one month. The reductions had been set to taper down to 7.7 million barrels starting in July.
Bloomberg reported that OPEC and Russia were concerned rising prices of crude benefit US shale production, which could come back online as prices rise.
US crude inventories, meanwhile, fell in the latest week.
The Energy Information Administration reported Wednesday that US stocks fell by 2.1 million barrels for the week ended May 29.
But that fall wasn’t the real story.
Matt Smith, director of commodity research at ClipperData told Marketwatch.com that a drop in imports led to the fall in crude inventories, as well as an increase in refinery runs and a 4 million-barrel shift of oil from commercial inventories into the Strategic Petroleum Reserve, “Without this transfer, oil inventories would have reached a record high,” he said.
The EIA report showed crude stocks at the Cushing, Oaklahoma delivery (for the WTI contract on Nymex) hub declined by about 1.8 million barrels for the week.
Meanwhile Comex gold for August delivery lost $US29.20, or 1.7%, to settle at $US1,704.80 an ounce, falling for a third straight session decline.
Gold fell further in after-hours trading and was around $US1,701 an ounce at 7 am, Sydney time.
Comex July silver fell by 30 cents, or nearly 1.7%, at $US17.958 an ounce and July copper fell by 0.1% to $US2.4875 a pound.
