Strong gains in Energy stocks and M&A activity in the Tech sector helped US stocks inch to fresh record highs. The S&P 500 gained 0.1% yesterday, bringing the YTD total return to 17.7%.
Energy stocks were buoyed by a 3.5% move higher in oil prices. That move in oil prices, which have gained 14% over the past month, came as a crackdown on corruption in Saudi Arabia led to the arrest of numerous high-profile individuals. This fuelled speculation that OPEC would extend supply cuts at a meeting later this month.
In currency markets, the dollar traded broadly flat against the euro while sterling gained 0.6%. Negative sentiment towards the yen came as President Trump spoke of Japan’s unfair trade advantage and that he intends to correct this by making it easier to conduct business in the US.
European equities closed marginally lower yesterday. The Euro Stoxx 50 index fell 0.2% while indices in Germany, Spain, and France also closed lower.
However, European indices are set to open higher this morning as corporate earnings season remains in full swing. Futures indicate that the Euro Stoxx 50 index will open 0.25% higher, the UK’s FTSE 100 is expected to open 0.15% stronger, and the German DAX index is poised to gain 0.30%.
Asian stocks enjoyed a very strong session this morning. Japanese stocks gained 1.7%, Chinese equities rose 0.7% and Australian stocks gained 1.2%.
Strong corporate earnings, a continued rebound in commodity prices, and a weaker yen contributed to the positive session in Japan. Energy stocks were the biggest beneficiary of the positive risk-on session, gaining 3.3%.