STOCKS AT 2016 HIGHS AS OIL SURGES
Thursday the European Central Bank, better known as the ECB, said it was pushing its key deposit rate further into negative territory. It might seem far-fetched, but it actually makes sense – in theory.
The Public Accounts Committee (PAC) said the £130m (~ $181) settlement “seems disproportionately small”, compared with the size of its UK business.
A powerful rally sent stocks to their highest point of the year Friday as oil prices jumped and as investors continue to assess the European Central Bank’s additional stimulus measures.
The Dow Jones industrial average was up about 210 points, or 1.3%, just past noon ET. The Standard & Poor’s 500 index gained 1.4% and the Nasdaq composite index gained 1.4% as it once again exited correction territory, meaning a drop of 10% or more from its high last year.
Specialists work on the floor of the New York Stock Exchange. (Photo: Richard Drew, AP)
The strong end to a week that saw the bull market celebrate its seventh anniversary has the Dow and S&P on track to close at their highest levels since the end of 2015. That was just before Wall Street headed into its worst start ever for a year.
Now, exactly a month after the stock market appeared headed for its first bear market since the financial crisis, stocks have almost wiped out their losses for 2016, with the Dow and S&P both down a little more than 1% for the year.
The impetus for the surge in stocks came from oil, which rallied after the International Energy Agency said “there are signs that prices might have bottomed out.”
In its monthly oil market report, the Paris-based organization that represents the world’s major oil-consuming nations, said supplies dropped in February by 180,000 barrels per day. But it also noted a sharp slowdown in demand growth, particularly in the United States and China.
U.S. benchmark crude oil rose 2.2% to $38.68 while Brent crude was up 0.9% to $40.40.
European markets rallied Friday as Germany’s DAX rose 3.2%, France’s CAC 40 jumped 3.1% and Britain’s FTSE 100 was 1.7% higher.
Stocks had initially fallen on comments by ECB chief Mario Draghi on Thursday that underscored the weakness of the 19-country eurozone economy and the desperation of monetary authorities to act.
But they rebounded Friday as investors digested the raft of measures announced. They included three interest rate cuts, loans to banks, and an expansion to a bond-buying stimulus program. Shares in banks, which will be supported by the ECB loans, were among the biggest gainers on Friday.
Asian stock markets were higher despite turbulence brought on by the ECB announcement.
Japan’s Nikkei 225 index gained 0.5% to close at 16,938.87 while Hong Kong’s Hang Seng index rose 1.1% to 20,199.60. The Shanghai composite index rose 0.2% to finish at 2,810.31.
U.S. stocks gave up early gains Thursday after reacting bullishly to the ECB’s move to cut interest rates further into negative territory and increase its year-old bond-buying program. But the gains faded after ECB president Mario Draghi said it is unlikely rates will be pushed lower from current levels.
Contributing: Adam Shell, Associated Press
