Global equity markets rose on yesterday, with European shares hitting eight-year highs on Royal Dutch Shell's $70 billion bid for energy firm BG Group, while the dollar slipped ahead of the release of US Federal Reserve minutes.
Equity markets briefly sold off after US Energy Information Administration data showed stockpiles of US crude saw their largest weekly build since March 2001, leading crude oil prices to fall further.
News of the first major merger in the energy industry in more than a decade boosted European shares, led by a rally in energy stocks that had tumbled as prices for crude oil and gas plunged since last summer.
The STOXX energy sector index in Europe, which rose as much as 6.1 per cent, was last up 2.6 per cent, while the pan-European FTSEurofirst 300 index of leading regional shares was up 0.04 per cent.
“The sector has been ripe for consolidation given the bearish outlook for oil prices,” said Saxo Bank trader Andrea Tueni. “We could see other takeovers in the industry in the coming weeks and months.”
Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey said Shell's bid is a big deal in a hard-hit sector that has been the weakest part of the equity market.
But US energy shares lagged, with oil super-majors Exxon Mobil and Chevron down 0.9 per cent and 1.1 per cent, respectively.
The blended estimate for US first-quarter corporate earnings growth is a negative 2.8 per cent, according to Thomson Reuters data, but excluding the energy sector, the earnings growth estimate is up 5.4 per cent.
The Dow Jones industrial average rose 15.31 points, or 0.09 per cent, to 17,890.73. The S&P 500 gained 1.42 points, or 0.07 per cent, to 2,077.75 and the Nasdaq Composite added 20.32 points, or 0.41 per cent, to 4,930.55. MSCI’s all-country world index, which measures equity performance in 46 countries, rose 0.22 per cent.
The dollar retreated after the Bank of Japan kept monetary policy unchanged, following the greenback's near three-week high against the yen on Tuesday. The greenback also fell ahead of the release of Fed minutes at 2pm (1800 GMT) and the start of a US earnings season.
The dollar shed 0.3 per cent to 119.90 yen. The dollar index fell 0.13 per cent to 97.706, and the euro gained 0.1 per cent to $1.0824.
Oil prices fell below $58 a barrel as industry data showed a larger-than-expected weekly increase in US stockpiles and as Saudi Arabia reported record output in March.
Brent May crude was down $1.91 at $57.19 a barrel. May crude dropped $2.31 to $51.67.