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While you were sleeping: Oil deflates on US stockpiles, Wall St up

Oil retreats as US inventories increase while the Dow rises 122 points.

Margreet Dietz
Thu, 08 Oct 2015

Equities in the US and Europe rose, while oil gave up its earlier gains following a US government report showing a larger-than-expected gain in crude inventories.

As investors geared up for the earnings season, oil retreated after a US Energy Information Administration report showed domestic crude inventories increased by 3.1 million barrels last week.

West Texas Intermediate was recently down 40USc at $US48.13 a barrel, after rising as high as $US49.71 earlier in the session.

"Today's report was a complete disaster for those who bet on higher prices as it shows inventories and production are up," Seattle-based US Bank Wealth Management senior investment strategist Rob Haworth told Bloomberg. "It's hard to argue for $US50 oil with these fundamentals."

Wall Street moved higher. At the close, the Dow Jones Industrial Average gained 0.7%, of 1222.10 points, to 16.912.29. The Standard & Poor's 500 Index rose 0.8% to 1995.83, while the Nasdaq Composite Index rose 0.9% to 4791.15.

Gains in shares of Johnson & Johnson and those of Merck, each last up 1.8 %, led the Dow higher.

With expectations firming the US Federal Reserve may refrain from a planned interest rate increase this year, San Francisco Fed Bank President John Williams has reminded investors a hike is still on the table.

"We're balancing a number of considerations, some of which argue for a little more patience in raising rates and others that argue for acting sooner rather than later," he says.

"And given the progress we've made and continue to make on our goals, I view the next appropriate step as gradually raising interest rates, most likely starting sometime later this year.

"All in all, things are looking up, and if they stay on track, I see this as the year we start the process of monetary policy normalisation."

The chance of a December hike has dropped to 36%, from 60% at the end of August, according to futures data compiled by Bloomberg.

"It's clear that once the Fed begins raising interest rates, the process will be slower than we've ever seen," Memphis-based Raymond James market strategist Ellis Phifer told Reuters.

In Europe, the Stoxx 600 Index ended the session with a 0.1% increase from the previous close. France's CAC 40 Index also eked out a 0.1% gain, while the UK's FTSE 100 Index rose 0.2%, and Germany's DAX Index advanced 0.7%.

A report showed industrial production in Germany unexpectedly dropped in August.

SABMiller rejected an improved takeover proposal from Anheuser-Busch InBev, saying the £68 billion ($US104 billion) offer wasn't high enough.

"It still very substantially undervalues SABMiller, its unique and unmatched footprint, and its standalone prospects," the company says.

(BusinessDesk)

 

Margreet Dietz
Thu, 08 Oct 2015
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While you were sleeping: Oil deflates on US stockpiles, Wall St up
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