The energy sector led gains in US shares yesterday and European shares pared losses as oil prices rebounded following a short span of 12-year lows.
Major US indexes rose after sinking to 3-1/2 months lows on Wednesday.
Gains in stocks and oil also helped push the US dollar higher, while the rebound in risk assets reduced demand for safe-haven gold and US government debt.
Equity markets have tumbled to start the year as volatility in Chinese shares and the persistent slide in oil made investors jittery about the health of the global economy.
Oil prices rose more than one per cent, and the commodity’s turn may have prompted investors to cover short positions in commodity-related shares, said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina. The S&P energy group was the best-performing sector.
“The stock market seems to be trading very coincident with the price action in oil,” Todd said.
The Dow Jones industrial average rose 131.59 points, or 0.81 per cent, to 16,283, the S&P 500 gained 14.23 points, or 0.75 per cent, to 1,904.51 and the Nasdaq Composite added 18.04 points, or 0.4 per cent, to 4,544.11.
Better-than-expected results from JP Morgan also gave a boost to what is expected to be a dour US corporate earnings season.
The pan-European was down 1.5 per cent, hurt by a slump in the auto sector as Renault faced an emissions probe, but the index came off its 13-month lows.
MSCI’s broadest gauge of stocks globally fell 0.4 per cent.
Benchmark Brent oil snapped an eight-day rout as some players covered short positions after crude prices plumbed new 12-year lows on fears of Iran adding to global oversupply quicker than thought.
Traders said options expiry for the front-month contract in US crude, scheduled at yesterday’s settlement, was also pushing players to cover positions.
“Natural covering interest is buoying the market as many had $30 as an objective,” said Pete Donovan, broker at Liquidity Energy in New York.
US crude prices rose two per cent to $31.11 a barrel, while benchmark Brent crude rose 1.5 per cent to $30.75 a barrel.
Concern about a supply glut has helped drag down oil prices to around 12-year lows.
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