World stock markets edged higher yesterday, buoyed by a slight rebound in oil prices after hitting seven-month lows, while the US dollar weakened for a second consecutive session.
Oil edged up from November lows hit in the prior session, but prices remained under pressure from a supply glut that has persisted despite Opec-led efforts to balance the market.
US crude rose 1.62 per cent to $43.22 per barrel and Brent was last at $45.71, up 1.99 per cent on the day.
“It’s pretty low and you are looking for a bit of a breather but all the forces seem to be aligning against the price of oil, it is just a question of where does it settle out,” said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta, Georgia.
“You go below $40 and you get a lot of people who are worried about things.”
With the gains, the energy sector in Europe remained under pressure, down 0.4 per cent, but well off earlier lows. The index is down about two per cent on the week and is on track for its fifth straight weekly drop.
Those declines weighed on European shares but the picture was reversed on Wall Street, with energy up 0.5 per cent, among the best performing sectors.
Yesterday, the Dow Jones Industrial Average rose 35.07 points, or 0.16 per cent, to 21,445.1, the S&P 500 gained 3.46 points, or 0.14 per cent, to 2,439.07 and the Nasdaq Composite added 4.15 points, or 0.07 per cent, to 6,238.10.
Healthcare, up 1.5 per cent was the best performing group on Wall Street as Senate Republicans unveiled a draft bill to replace the Affordable Care Act.
Yesterday, the pan-European FTSEurofirst 300 index lost 0.01 per cent and MSCI’s gauge of stocks across the globe gained 0.20 per cent.
Since peaking in late February, crude has dropped around 20 per cent, with only brief rallies, completely erasing gains at the end of the year after the initial Opec-led production cut.
Oil’s decline has hurt energy stocks and curbed investor expectations for higher inflation that would enable major central banks to pursue tighter monetary policies.
Subdued inflation and concerns about the outlook for world growth when the US Federal Reserve is raising interest rates have led to a flattening in bond yield curves.
The gap between yields on US five-year notes and 30-year bonds on Wednesday narrowed to 94.9 basis points, holding near its smallest since December 2007. The curve steepened slightly to 96.5 basis points yesterday, suggesting the flattening of the yield curve this week was stalling.