Global equity indexes and oil prices climbed for a second day yesterday, as frigid weather across the United States and Europe boosted energy demand.
Oil, which had tumbled during a recent rout in world markets, soared nearly 8 per cent earlier Friday to trade above $30 a barrel, thanks to higher short-term demand and as traders cashed in their short positions.
Energy shares led the advance in US stocks, which surged more than one per cent in morning trading. Exxon Mobil shares were up 2.1 per cent.
Comments by European Central Bank President Mario Draghi on Thursday, suggesting the bank could ease its monetary policy at its March meeting, helped encourage investors bruised by a brutal selloff that began at the start of 2016.
“I don’t think anybody really expected to see this kind of rout in global equities at the start of the year,” said Scott Brown, chief economist at Raymond James in St Petersburg, Florida.
Brent was up seven per cent at $31.30 a barrel, set for its biggest one-day rise since August 2015 and well above this week’s low of $27.10, while US crude rose 6.7 per cent to $31.54.
The MSCI All Country World Index jumped 2.5 per cent, while Europe’s pan-regional FTSEurofirst 300 index shot up 3.1 per cent.
On Wall Street, the Dow Jones industrial average was up 159.16 points, or one per cent, at 16,041.84, the S&P 500 gained 28.07 points, or 1.5 per cent, to 1,897.06 and the Nasdaq Composite added 85.88 points, or 1.92 per cent, to 4,557.94.
Japan’s Nikkei surged 5.9 per cent, the most in more than four months. Chinese stocks, which had fallen almost 20 per cent since the start of the year, rose 1.3 per cent. Investors seized on Mr Draghi’s comments and bet that the Bank of Japan might also ease policy further next week, while the Federal Reserve goes slow in raising US rates this year.
The dollar rose, boosted by increased expectations of monetary easing by central banks in Europe and Japan, and following strong US housing data.
The dollar touched a two-week high against the Japanese yen , rising 0.7 per cent to 118.50 yen. The yen has risen nearly three per cent against the greenback this year as the sell-off in oil and global equity markets encouraged traders to seek out the safe-haven currency.
US Treasuries prices fell as a resurgence in oil and stock prices sparked a fresh wave of selling of safe-haven government debt. Benchmark yields rose further from Wednesday’s three-and-a-half-month lows.
Benchmark 10-year Treasury notes were down 18/32 in price to yield 2.082 per cent, up 6 basis points from late on Thursday. The 10-year yield climbed from 1.939 per cent on Wednesday, the lowest since early October.