Monday May 9th

9-05-2016

All major indexes turn higher, attempt to shake oil slide

U.S. stocks opened lower Monday, weighed by declines in oil prices. "I guess maybe this morning the futures are following oil. Whether that remains the case through the rest of the day is specious," said Peter Boockvar, chief market analyst at The Lindsey Group. Oil prices gave up earlier gains to trade more than 1 percent lower ahead of the U.S. stock market open, amid declines in daily production capacity from Canada's most destructive wildfire in recent memory. Reuters said the lost capacity of about a million barrels equals more than a third of the country's typical daily production, and nearly all of Canada's crude from oil sands is exported to the United States. "The crosscurrents are playing in a commodities market that's had a significant lift," said Art Hogan, chief market strategist at Wunderlich Securities. Oil reverses gains after rally on Canadian wildfire outages. On Saturday, crude exporter Saudi Arabia appointed Khalid al-Falih, chairman of the state oil giant Saudi Aramco, as its new energy minister, replacing Ali al-Naimi, who had held the post since 1995. China's crude oil imports rose 7.6 percent in April from a year ago, according to customs data released Sunday, Reuters said. The demand was driven by strong demand from domestic private refiners, many of which received licenses from Beijing last year to import crude for the first time. Overall, China reported 10.9 percent decline in imports and a 1.8 percent drop in exports from the same period last year. Chicago Fed President Charles Evans said in a Reuters report Monday solid U.S. economic fundamentals should support pickup in growth this year to about 2.5 percent, but the Fed's current "wait-and-see" approach to monetary policy is appropriate. Minneapolis Fed President Neel Kashkari is scheduled to speak in the afternoon, while San Francisco Fed President John Williams is due to speak early in the evening ET. On Friday, the April nonfarm payrolls report showed creation of 160,000 jobs, below expectations. The labor force participation rate fell to 62.8 percent. New York Fed President William C. Dudley said in a New York Times article Friday the jobs report was perhaps softer than expectations but gave it little weight in affecting his economic outlook. He added in the piece that two hikes this year remained a "reasonable expectation." U.S. stocks closed higher Friday, amid gains in oil prices. Asian stocks ended mixed on Monday, as oil prices rallied on supply outages in Canada and amid surprise over the exit of Saudi Arabia's veteran oil minister Ali al-Naimi. Investors were also digesting China's weaker trade figures released Sunday, and mulling Federal Reserve interest rate expectations after U.S. non-farm payrolls on Friday showed a slide in the headline job number to 160,000. Mainland China markets fell in Asian trade; the Shanghai composite closed down 2.76 percent, or 80.339 points at 2,832.91, while the Shenzhen composite ended the session lower by 3.59 percent, or 67.265 points to 1,804.34. Hong Kong's Hang Seng index closed up 0.23 percent, or 46.94 points, at 20,156.81. Japan's Nikkei 225 finished the session higher by 0.68 percent, or 109.31 points, at 16,216.03. The dollar/yen pair was trading up 0.37 percent at 107.52. A weaker yen is generally better for Japanese manufacturers, because it makes their products cheaper for overseas buyers. Oil prices dived on Monday as caution among investors offset a decline in daily production capacity due to Canada's most destructive wildfire in recent memory. The lost capacity — about a million barrels — is equivalent to well over a third of the country's typical daily production, and almost all of Canada's crude from oil sands is exported to the United States. U.S. crude futures were down 43 cent at $44.23 a barrel by 9:05 a.m. ET (1305 GMT), up for a fourth day in a row, while Brent crude futures fell 68 cents to $44.69 a barrel. Gold fell more than 1 percent on Monday after failing to break back above $1,300 in the wake of a weaker than expected U.S. jobs report on Friday, with a firmer dollar prompting some investors to cash in gains in the metal. Spot gold was down 1.2 percent at $1,272.65 an ounce, while U.S. gold futures for June delivery were down $19.40 at $1,274.60. That erased the 0.8 percent gain gold made on Friday following non-farm payrolls data.