A surge in oil prices to new 2016 highs on hopes of a deal to limit production at next Sunday’s meeting sparked a surge on Wall Street and other markets overnight.
Our market will be up more than 30 points this morning after trading on the overnight futures market showed solid gains.
An unconfirmed story from a Russian newsagency claimed Russia and Saudi Arabia had agreed to limit production, regardless of what Iran says or does (Iran won’t agree to limits).
The news saw big rise in oil prices in Europe and the US, while gold did well, the Aussie dollar rose towards 77 US cents.
West Texas Intermediate crude futures climbed as much as 4.8% to $US42.17 a barrel, while Brent crude futures jumped 4.5% to $US44.73 a barrel. It was the highest mark since December 4 for both contracts.
The energy sector led Wall Street higher on the back of a sharp rally for crude oil. The financials and materials sectors saw sharp rises as well as every major S&P 500 sector advanced.
Also helping our market will be another big rise in iron ore prices overnight.
Prices jumped 4.6% to $US59.22 a tonne on Tuesday after jumping 4.8% on Monday, according to Metal Bulletin. So far in 2016, prices have risen 36%. Copper prices jumped more than 5% in New York to above $US2.14 a pound, gold prices rose 0.2% to $US1,290.90 an ounce and silver was up 1.4%.
The rally was sparked by the report that Saudi Arabia and Russia have agreed to a production freeze that will not be dependent on cuts from Iran. That has not been confirmed. Iraq has called for a production freeze as well. The expected move by the IMF to trim its estimate for global economic growth had no impact on markets.
The Fund cut its estimate to 3.2% for 2016 from 3.4%. The IMF also cut its growth estimate for the U.S. to 2.4% in 2016 from an earlier estimate of 2.6%, but raised China’s estimate slightly.
The S&P 500 added 19.73 points, or 1%, to close at 2,061.72 for a year-to-date gain of 0.9%, which was driven by the 2.8% jump in the energy sector.
The Dow jumped 164.84 points, or 0.9% to close at 17,721.25, while Nasdaq ended 38.69 points, or 0.8% higher,to close at 4,872.09.
