NEW YORK Global equity markets rallied on Tuesday as investors engaged in bargain hunting and shrugged off a downturn in oil prices after hopes for an agreement among top producers to freeze output faded.
After an extended holiday weekend, Wall Street financials, up 1.8 percent, and consumer discretionary stocks, up 2.5 percent, were among the best performing sectors on the session after showing some of the largest declines for the year.
Top oil exporters Russia and Saudi Arabia agreed to freeze output levels but said the deal was contingent on other producers joining in, a major sticking point with Iran absent from the talks and determined to raise production.
The uncertainty around the negotiations dented expectations for a supply cut and sent oil tumbling off its highs. Brent crude settled down 3.6 percent at $32.18 after hitting a 12-day high of $35.55 a barrel. U.S. crude settled off 1.4 percent at $29.04 after touching a high of $31.53.
After climbing as much as 1.1 percent, the S&P energy sector closed up 0.8 percent.
"I take it as extremely positive news that the U.S. market is rallying on a day that crude is down," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.
"We may be finally breaking that toxic correlation that we’ve been seeing that has been turning the entire financial world on its head."
The Dow Jones industrial average rose 220.44 points, or 1.38 percent, to 16,194.28, the S&P 500 gained 30.66 points, or 1.64 percent, to 1,895.44 and the Nasdaq Composite added 98.44 points, or 2.27 percent, to 4,435.96.
The S&P 500 has rallied after closing at its lowest level since February 2014 on Thursday, notching its best two-day performance in six months.
The MSCI World equity index was up 0.99 percent.
Shares in Europe lost ground after a 6 percent rally in the prior two sessions as oil faded, with the pan-European FTSEurofirst 300 stocks index closing down 0.43 percent. The STOXX Europe 600 basic resources index fell 0.8 percent after rising as much as 3 percent in earlier trading.
The yen strengthened against the dollar to 113.96 following the oil announcement, which dented risk appetite. It remained well off a 15-month high of 111.99 yen per dollar hit last week, when investors piled into the yen as a safe haven and expectations faded that the Federal Reserve would raise interest rates this year.
The dollar rose 1.02 percent against a basket of major currencies while the euro edged lower at $1.1136, down from last week's four-month high of $1.1377.
Ten-year U.S. Treasury notes lost 11/32 in price to yield 1.7827 percent, as demand for safe-haven bonds was trimmed by the rally in equities and competing corporate bond supply led by Apple.
Gold, which had its best week in four years last week, edged down 0.78 percent at $1,199.86 after rising as high as $1,216.80 as gains in U.S. equities eased demand for the yellow metal.
Copper edged down 0.11 percent at $4,556.85 a tonne.
(Additional reporting by Lewis Krauskopf; Editing by Meredith Mazzilli and Chris Reese)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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Updated Date: Feb 17, 2016 03:15:12 IST