Commodity Rally Gives Stocks a Boost
19 April 2018 - 12:19PM
Dow Jones News
By Joanne Chiu and Riva Gold
-- S&P 500 futures little moved
-- Hang Seng climbs
-- Crude oil rally continues
Stocks in Europe and Asia mostly inched higher Thursday as a
rally in commodity prices continued to boost shares of oil-and-gas
companies.
The Stoxx Europe 600 was up less than 0.1% late morning and the
FTSE 100 edged up 0.2% near its highest since February, following
modest gains in Japan, Hong Kong and Australia. Futures pointed to
a 0.1% opening dip for the S&P 500 after three straight days of
advances.
Oil-and-gas companies were among the best performing stocks in
Europe, Asia and U.S. premarket trading, with Brent crude oil last
up 0.8% at $74.09 a barrel after settling Wednesday at its highest
since November 2014 when U.S. stockpiles fell by more than analysts
were expecting.
"It's allowing commodity companies to make money and business
investment to pick up," said Guy Miller, chief market strategist at
Zurich Insurance Group.
Some analysts also noted, however, that higher commodity prices
typically push up raw materials costs for other companies, can put
pressure on consumers and ultimately exert upward pressure on
inflation.
"Consumers are more sensitive to rises in the price of gas than
they are to declines in price of gas, so we have to watch that to
see if that weighs on broader consumer confidence out there and if
that has any impact on growth," said William Delwiche, investment
strategist at Baird.
Investors also continued to parse a slate of corporate results.
A solid start to the earnings season has lifted stock markets this
week after a rocky start to the second quarter driven by worries
about trade tensions, technology regulation and geopolitical
uncertainties.
"With the recent jitteriness of markets...the earnings season
should remind people that companies are still growing," said
Caroline Simmons, deputy head of the U.K. investment office at UBS
Wealth Management.
In Europe on Thursday, shares in Publicis Groupe rose 6.8% after
the advertising agency reported solid revenue figures and
reaffirmed its 2018 targets, while Swiss conglomerate ABB rose 4.9%
after reporting a drop in net profit but slightly higher
revenue.
A post-earnings decline in shares of Novartis and Unilever
weighed down the broader Stoxx Europe 600 index, however, with the
companies' shares down 2% and 1.9% respectively, while Nestlé rose
just 0.4% after announcing results.
Unilever and Nestlé both struggled to raise prices in the first
quarter as some of the world's largest consumer goods companies
face increasingly fierce competition.
"Consumers are still very price conscious -- it's a reason we
don't think inflation will get out of hand," said Mr. Miller.
Earlier, Asia-Pacific stocks mostly rose Wednesday, supported by
gains in energy companies and Chinese markets.
Hong Kong's China Enterprises Index, made up of Chinese-based
firms with listings in Hong Kong, climbed 2.1%, while the benchmark
Hang Seng Index rose 1.4%. Oil-related stocks helped fuel gains, as
PetroChina jumped 5.7% and peer Cnooc gained 4.4%.
Australia's S&P ASX 200 edged up 0.3%, the Shanghai
Composite Index rose 0.8% and Japan's Nikkei Stock Average edged up
0.2%.
--Nathan Allen contributed to this article.
Write to Joanne Chiu at joanne.chiu@wsj.com and Riva Gold at
riva.gold@wsj.com
(END) Dow Jones Newswires
April 19, 2018 06:04 ET (10:04 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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