A gauge of stocks across the globe extended its best run of the year yesterday, with higher oil prices supporting risk assets even as earnings in Europe and the United States limited gains.
Confident talk that European Union leaders will reach a deal to help keep Britain in the bloc also gave markets support despite lingering concern about the state of the global economy.
Wall Street opened little changed with consumer stocks weighing on the S&P 500 after Wal-Mart, down 4.5 per cent, reported a decline in quarterly earnings and cut its full-year forecast. IBM, up six per cent, offset the retailer’s decline.
The action in stocks followed the best three-day run for the S&P 500 since August and for an MSCI index of shares worldwide since 2011.
“Investors are taking a step back, evaluating what’s been going on and for the moment, there’s a lack of negative news and some stability in oil,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
The Dow Jones industrial average rose 7.54 points, or 0.05 per cent, to 16,461.37, the S&P 500 lost 3.99 points, or 0.21 per cent, to 1,922.83 and the Nasdaq Composite dropped 23.02 points, or 0.51 per cent, to 4,511.04.
Emerging market stocks rose 1.4 per cent to hit their highest in six weeks. The pan-European FTSEurofirst 300 index was 0.2 per cent higher although the overall earnings picture remained weak.
It was a choppy session in Europe as EU leaders began a two-day summit in Brussels. But the mood improved after European Commission President Jean-Claude Juncker said he was “quite confident” a deal would be reached to keep Britain in the EU.
Prime Minister David Cameron said hard work and good will should help him clinch a deal at the summit, described by leaders of the 28-nation bloc as the best chance of preventing Britain leaving.
Brent crude rose above $35 a barrel and has gained nearly six per cent so far this week after Iran welcomed plans by Russia and Saudi Arabia to freeze output and an industry report showed a surprise drop in US inventories.
US oil has gained 7.5 per cent so far this week.
“What we see still is extreme volatility,” said Carsten Fritsch, analyst at Commerzbank.
“I would not be surprised to see prices retreating again by a big margin in coming days.”
US Treasury debt prices rose as stocks struggled to extend their gains. Benchmark 10-year Treasury notes last traded 7/32 higher in price for a yield of 1.793 per cent, down two basis points from late on Wednesday.
The dollar was slightly stronger against a basket of currencies even after comments on Wednesday from one of the Federal Reserve’s traditional “hawks,” James Bullard, that it would be “unwise” now for the central bank to keep hiking rates given low inflation expectations and market volatility. The euro slipped 0.3 per cent versus the greenback at $1.1095 and the safe-haven yen was near its session high against the dollar at 113.66.