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Morning report

Energy Sector Leading The Charge

Global markets rose on Thursday as oil prices surged after Trump signalled Russia and Saudi Arabia may cut oil production to push up prices. This tentative positive sign for the oil sector outweighed its potential detrimental effects on the world economy, and the news that 6.6 million Americans lost their jobs last week.

US stocks up as Brent crude soared as much as +47%, before settling down to an +18% gain

Wall Street pushed higher on Thursday after Donald Trump claimed Saudi Arabia and Russia agreed to curb oil production in order to stabilise prices. He lied — they did no such thing, but Saudi clarified it did call for talks, which Russia said it has not agreed to. US weekly jobless claims soared past 6.6 million last week, adding to the 3 million the week before. The S&P 500 gained +1.7% and the Nasdaq Composite rose +1.4%. The energy sector, which had lost half its value this year, jumped +13%, with Exxon Mobil (+7.5%) and Chevron (+10.9%) posting the biggest gains among Dow components. Halliburton (+17.0%) and Schlumberger (+7.0%) also posted notable gains. Boeing (-3.0%) is offering buyout and early retirement packages to employees as a near collapse in business activity crushed liquidity and sparked mass staff furloughs. Wallgreens Boots Alliance led the losers, falling -8.2%, after it reported quarterly results that beat estimates but said it was seeing steep declines in same store sales and held off on issuing full-year guidance.

Energy Surge pushes Europe and UK higher

The Stoxx 600 closed a volatile session +0.4% higher, spurred by a late session rally in the energy sector. Oil producers including Repsol (+6.0%) and oil service firms including TechnipFMC (+15.4%) were helped as crude oil futures jumped by a quarter. Big pharma, including Roche (-2.3%) and AstraZeneca (-1.7%) lost ground. Carnival Plc (-22.3%) bottomed out the Stoxx 600 for a second straight session.

The FTSE 100 closed up +0.5%, with energy stocks jumping +7.8%. Oil majors Royal Dutch Shell jumped +9.4% and BP added +5.9%. Smaller oil companies John Wood (+15.4%) and Cairn Energy (+15.0%) enjoyed even stronger gains. Gains were limited by falls in shares of Standard Life Aberdeen (-8.0%), Phoenix Group Holdings (-3.5%) and Smith & Nephew (-3.5%) as they traded ex-dividend.

Asian Stocks were mixed

Asian stocks were mixed after fear had descended on US markets in the preceding session. The Shanghai Composite (+1.7%) and Hang Seng (+0.8%) gained while the Nikkei 225 lost -1.4%.

The ASX 200 finished -2.0% down on Thursday. The big four lenders, CBA, Westpac, ANZ and NAB lost between -3.8% AND -5.6%, after the outlook for the Australian banking sector was downgraded.

The NZX 50 finished flat on Thursday, with Kathmandu slumping -27.7% after its capital raising.

Crude rose, Gold rose and Iron Ore was flat

WTI crude rose +19.7% to US$24.22, while gold rose +1.2% to US$1609.01 and iron ore remained flat at US$80.34/MT.

NZ Headlines

Troubled finance company FE investments has been put into receivership with $54.3 million of New Zealand investor deposits at risk.

The Covid-19 pandemic has knocked the wind out of the commercial property sector's sails well before the national lock down started, a survey shows.

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