Commodity-linked stocks and world currencies got a lift yesterday from a surge in crude oil prices after major producers Saudi Arabia and Russia said they would extend oil supply cuts into 2018.
Energy ministers from the world’s top two oil producers said cuts should continue until March, longer than an optional six-month extension specified in the deal.
“When the two biggest oil producers of the world reach a consensus on the extension of a supply cut, the market will listen,” Tamas Varga, analyst at oil broker PVM, said in a report.
The Organisation of the Petroleum Exporting Countries meets in Vienna on May 25 to consider the extension. US crude rose 2.72 per cent to $49.14 per barrel and Brent was last at $52.09, up 2.46 per cent on the day.
The news from the energy sector more than offset concern over the weekend after a successful missile test by North Korea and a cyber attack that affected computers in more than 150 countries.
The global “ransomware” cyber attack disrupted factories, hospitals, shops and schools, but spurred investors yesterday to buy stocks set to benefit from higher cyber security spending by firms and government agencies.
An exchange-traded fund of cyber security shares across the globe hit a near two-year high and was last up 3.3 per cent at $30.74.
US cyber stocks jumped, but the largest advancing sector on Wall Street was energy as shares tracked oil prices higher. The benchmark S&P 500 index hit a record high.
“At this level, there isn’t too big a correlation between oil and equities but since we’ve seen oil fall quite a bit in a month or so, today’s rally in oil is helping the market grind higher,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
The Dow Jones Industrial Average rose 72.73 points, or 0.35 per cent, to 20,969.34, the S&P 500 gained 10.67 points, or 0.45 per cent, to 2,401.57 and the Nasdaq Composite added 23.24 points, or 0.38 per cent, to 6,144.47.
The pan-European FTSEurofirst 300 index rose 0.01 per cent and MSCI’s gauge of stocks across the globe gained 0.50 per cent.
Emerging market stocks rose 0.90 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.7 per cent higher, while Japan’s Nikkei lost 0.07 per cent.
The currencies of resource-linked economies got a boost from the jump in oil prices. The Canadian dollar hit its highest level in over two weeks against the greenback.
The US dollar was also hurt by weak data on New York State area manufacturing.
The dollar index, tracking the currency against a basket of other major units, fell 0.36 percent, with the euro up 0.45 per cent to $1.0977.