Oil Breaks $40 Amid Meeting Countdown; Japan Stock Futures Climb
published Apr 10th 2016, 5:54 pm, by Emma O’Brien
U.S. oil topped $40 a barrel for the first time this month, extending Friday’s surge amid easing concern over a global glut ahead of a meeting of major producers. Commodity-linked currencies held on to gains.
West Texas Intermediate crude extended its advance into a second day as the Australian currency traded steady with the Canadian dollar and South African rand after strengthening at least 0.5 percent on Friday. Stocks in New Zealand and Chicago-traded futures on Japan’s Nikkei 225 Stock Average opened higher as the yen pulled back following its best week in two months. Gold rose for a third day, while copper futures maintained gains ahead of prices data out of China, the world’s biggest industrial metals consumer.
Oil’s fortunes are having an impact beyond the commodity sector amid concern over the strength of the world economy and the impact of gyrating energy prices on inflation. Global equities are trading the most in sync with oil since June 2013, with major producers from Russia to Saudi Arabia set to meet April 17 to discuss a production freeze. Friday’s 6.6 percent bounce, WTI’s steepest since mid-February, was also fueled by an unexpected drop in U.S. stockpiles and a decline in the number of active rigs. Stocks globally fell last week amid concern over the potency of central bank stimulus efforts.
“Movements in oil prices seem to matter an awful lot for the direction and sentiment in financial markets at present,” Con Williams, an agricultural economist in Wellington at ANZ Bank New Zealand Ltd., said in a note to clients. “It seems to us the likelihood of any agreement being reached on April 17 to curb production is very low. This leaves a lot of event risk in oil markets, which could recoil quickly. What ultimately needs to be watched is the fundamentals, and in this regard they are slowly improving.”
New Zealand’s S&P/NZX 50 Index, the first major stock index to start trading each day in the Asia-Pacific region, added 0.1 percent as of 7:44 a.m. Tokyo time.
Futures on the Standard & Poor’s 500 Index were little changed early Monday, after the U.S. benchmark ended Friday up 0.3 percent, after coming close during the session to erasing the day’s gains. Energy producers and mining stocks led increases, with an S&P 500 sub-index of oil and gas companies climbing to its highest level since March 22.
Yen-denominated Nikkei 225 futures climbed 0.2 percent to 15,810 on the Chicago Mercantile Exchange, after jumping 2.1 percent last session. Contracts on the index traded in Osaka added 0.3 percent to 15,880 as of 3 a.m. Saturday. Japan’s currency was down 0.2 percent to 108.23 per dollar after appreciating for the past six days, its longest run of gains in almost a year.
In Australia, futures on the S&P/ASX 200 Index added 0.4 percent in trading at the end of last week, while those on the Kospi index in Seoul slipped 0.1 percent. Futures on Hong Kong’s Hang Seng Index were down 0.2 percent as contracts on the Hang Seng China Enterprises Index foreshadowed a drop of 0.3 percent. FTSE China A50 Index futures rose 0.1 percent in most recent trading.
As well as the Chinese reports on consumer and producer prices, Japan is due to report on machine orders Monday and Australia issues lending data. Malaysian factory output is due, along with an update on Taiwanese trade.