Global Stock Rally Peters Out
By
Riva Gold
Updated May 11, 2016 7:08 a.m. ET
Global stocks mostly drifted lower Wednesday as fluctuating oil prices dented a recent rally.
The Stoxx Europe 600 was down 0.7% halfway through the session, as shares of banks, auto makers and energy companies fell.
Futures pointed to a 0.2% opening loss for the S&P 500. Changes in futures don't necessarily reflect market moves after the opening bell.
Brent crude oil was up 0.5% at $45.76 a barrel after trading lower for most of the European morning. Investors weighed reports of growing supplies from Saudi Arabia and the U.S. against supply disruptions in Canada, Libya and Nigeria.
“There’s a lot of speculative market action going on at the moment,” said Augustin Eden, analyst at Accendo Markets.
“Equity markets are happy with a stable oil price, but it’s far from that at the moment,” he said, noting that there remains a global oversupply of the commodity.
Production data from the U.S. Energy Information Administration is due later Wednesday.
Stocks around the world had risen Tuesday as a rebound in oil prices helped U.S. indexes notch their biggest gains since March.
A man fills a car with fuel at a Petro-Canada gas station in Vancouver, British Columbia, Canada. The worst wildfire in Alberta history is boosting Canadian crude prices as oil companies evacuate workers and shut in output. ENLARGE
A man fills a car with fuel at a Petro-Canada gas station in Vancouver, British Columbia, Canada. The worst wildfire in Alberta history is boosting Canadian crude prices as oil companies evacuate workers and shut in output. Photo: Bloomberg News
That momentum began to stall, however, in Asian trade, as crude oil prices reversed course late in the session.
Major markets have traded within a narrow range in recent weeks, as investors have struggled to find fresh catalysts to push stocks higher.
“We’re stuck in a rut,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott, citing demanding U.S. valuations, uninspiring earnings growth and subpar global economic growth. “There just isn’t the kind of magnetism in the marketplace that demands investors move money off the sidelines and into equities.”
While stocks have bounced back from steep losses in January and February, havens such as gold and government bonds have held on to gains, underscoring investors’ caution.
The yield on the 10-year U.S. Treasury note was at 1.753%, not far from its low in February, while the yield on the 10-year German government bond was at 0.119%. Yields rise as prices fall.
Gold was up 0.9% at $1276.40 an ounce.
“In the short term, there are some clouds of uncertainty hanging over markets,” said Luca Simoncelli, an investment manager at Swiss investment firm Unigestion.
Recent U.S. economic data points, such as first-quarter growth figures, have come in softer, causing investors to question the likelihood of a rise in U.S. interest rates this year.
Meanwhile, in Europe, uncertainty around a British referendum on European Union membership has left some investors wary on the region’s assets. “The probably of a Brexit [British exit from the European Union] happening are not that high, but the implications are extremely relevant,” Mr. Simoncelli said.
Shares in Australia rose for a fifth consecutive session to their highest levels since the summer, as commodity-linked companies caught up with Tuesday’s gains in the oil price.
The Shanghai Composite Index gained 0.2% and Hong Kong’s Hang Seng Index fell 0.9%.
Japan’s Nikkei Stock Average ended 0.1% higher as the yen strengthened, raising concerns about the profitability of the region’s exporters. The dollar was last down 0.5% against the yen at ¥108.6830.
In other currencies, the euro was up 0.2% against the dollar at $1.1393. The British pound was down 0.2% against the dollar at $1.4427 after U.K. industrial production figures disappointed.
Write to Riva Gold at
riva.gold@wsj.com