Oil and stocks rebound on ECB comments

Oil prices and global stocks rebounded on Thursday, buoyed by comments from European Central Bank president Mario Draghi that raised hopes of further monetary stimulus, following a turbulent few days that wiped trillions of dollars off asset values.

US stocks were up in late morning trading, led by gains in telecommunications, energy and consumer discretionary shares, but trading was again choppy in most asset classes.

The euro fell to a two-week low against the dollar after Mr Draghi hinted of additional stimulus measures as early as March as economic risks had grown.

He cited concerns over China and emerging markets, volatility in financial and commodity markets and geopolitical risks, and said the tumult would prompt a March review of monetary policy. The euro fell below $1.08 for the first time in two weeks during his speech.

Oil

Oil rebounded after falling to a more-than-12-year low the previous day. US crude futures were up nearly 1 per cent at $28.60 per barrel. On Wednesday, US crude futures fell to their lowest since September 2003.

Crude oil prices, which have dropped more than 25 per cent since the start of the year, have been a key driver of a recent cross-asset rout.

“The underlying focus is still on oil because people are looking at the transmission mechanism to the real economy of lower oil prices,” said Gennadiy Goldberg, interest rate strategist, at TD Securities in New York.

“Lower oil prices are maybe great for the consumer, but not unilaterally good for the US economy.”

US Treasury debt yields edged lower in choppy trading, weighed by concerns over volatility in oil and global stock markets.

Equities jump

In the equity market, MSCI’s all-country world stock index rose 0.5 per cent. Europe’s pan-regional FTSEurofirst 300 index jumped 1.9 per cent. The Iseq closed almost 1.5 per cent higher.

The Dow Jones industrial average was up 131.35 points, or 0.83 per cent, to 15,898.09, the S&P 500 gained 14.29 points, or 0.77 per cent, to 1,873.62 and the Nasdaq Composite added 28.56 points, or 0.64 per cent, to 4,500.25.

A 3-per cent slump in Chinese stocks gave Asia another bruising.

MSCI’s 23-country emerging market index notched a 6-1/2 year low and Russia’s rouble tanked almost 5 percent at one point as it set a record low against the dollar for a second day running.

Reuters