Global Markets: Oil gains, stocks rally on renewed recovery hopes
By Herbert Lash NEW YORK (Reuters) - Crude prices rose and a gauge of global equities broke out of a three-week trading range on Wednesday as investors bet on a rapid recovery from the coronavirus-induced recession. Oil prices climbed more than 4% on signs of improving demand and a drawdown in U.S
By Herbert Lash
NEW YORK (Reuters) - Crude prices rose and a gauge of global equities broke out of a three-week trading range on Wednesday as investors bet on a rapid recovery from the coronavirus -induced recession.
Oil prices climbed more than 4% on signs of improving demand and a drawdown in U.S. crude inventories, while a surge in Facebook Inc and Amazon.com Inc to fresh records lifted the Nasdaq to within 5% of its all-time high.
U.S. Treasury yields were little changed and gold edged higher but gains were limited as risk appetite improved.
The markets are expecting economic recovery sooner rather than later though the risk exists that the slowdown isn't as temporary as some think, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
"There's a view that as the economy reopens there hasn't been, so far, a resurgence in the hospitalization rates and that perhaps some of the 'worst-ever' data that we've seen will soon be behind us," Arone said.
MSCI's gauge of stocks across the globe gained 1.28% to within 1 point of 500, after the benchmark was unable to climb past 495 the past three weeks.
The pan-European STOXX 600 index rose 0.98% to close just shy of a three-week high led by tech, chemicals and energy sectors.
Gains in energy, financial and industrial stocks signal the economy is rebounding, as economic data and corporate earnings do not provide the snapshot they usually do, Arone said.
"I'm looking at the price charts because the price charts will tell us about when the recovery will be here and how aggressive it will be," he said.
On Wall Street, the Dow Jones Industrial Average rose 328.44 points, or 1.36%, to 24,535.3. The S&P 500 gained 45.54 points, or 1.56%, to 2,968.48 and the Nasdaq Composite added 159.66 points, or 1.74%, to 9,344.76.
Two-thirds of 223 fund managers surveyed by Bank of America reckon recent equity gains indicate a bear-market rally.
U.S. crude inventories fell by 5 million barrels in the week ended May 15 to 526.5 million barrels, data from the Energy Information Administration showed, far better that analysts' expectations in a Reuters poll for a 1.2 million-barrel rise. [EIA/S]
U.S. crude rose 2.75% to $32.84 per barrel and Brent was at $35.30, up 1.88% on the day.
The euro extended gains on Monday's Franco-German proposal for a 500 billion euro common fund that could move Europe closer to a fiscal union.
The euro rose 0.48% to $1.0973 and the dollar index fell 0.35%. The Japanese yen strengthened 0.16% versus the greenback at 107.56 per dollar.
(Editing by Bernadette Baum)
This story has not been edited by Firstpost staff and is generated by auto-feed.