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Oil up after data, dollar gains as Brexit materializes

Published 03/29/2017, 12:01 PM
© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York
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By Rodrigo Campos

NEW YORK (Reuters) - Stocks edged up on Wall Street on Wednesday, not enough to lift a global equities index, while crude futures hit a week high after a smaller-than-expected build in U.S. inventories.

The euro slipped after Reuters reported European Central Bank policymakers are wary of making any new change to their policy message in April.

Weighing on the euro and pound, Prime Minister Theresa May formally began Britain's divorce from the European Union, a decision pitching her country into the unknown. On Tuesday, the Scottish Parliament backed a bid to hold an independence referendum that could break up the UK, adding another layer of uncertainty for investors.

Gains in the energy sector (SPNY), up more than 1 percent, kept the S&P 500 afloat, while none of the other ten sectors moved more than a half a percent up or down.

Wall Street rose on Tuesday, with the Dow snapping an eight-day losing streak after a jump in consumer data boosted hopes in a stronger U.S. economy. On Wednesday, contracts to buy previously owned U.S. homes jumped to a 10-month high in February.

"The big talk of the day is (Britain's) official request to leave the EU, which we think is likely to be a counter balance for the markets for many days to come," wrote in a note Peter Cardillo, chief market economist at First Standard Financial in New York.

"We see (U.S.) oil prices moving toward the $50 range as being the markets driving force of the day."

The Dow Jones Industrial Average (DJI) fell 67.89 points, or 0.33 percent, to 20,633.61, the S&P 500 (SPX) lost 1.65 points, or 0.07 percent, to 2,356.92 and the Nasdaq Composite (IXIC) added 5.01 points, or 0.09 percent, to 5,880.15.

The pan-European FTSEurofirst 300 index (FTEU3) rose 0.35 percent, while MSCI's gauge of stocks across the globe (MIWD00000PUS) fell 0.19 percent.

Emerging market stocks rose 0.09 percent.

Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) rose 0.42 percent while Japan's Nikkei (N225) closed up less than 0.1 percent.

GREENBACK GAINS FURTHER

The dollar index (DXY) gained 0.37 percent with the euro down 0.55 percent to $1.0752.

Sterling hit a one-week low of 1.2378 earlier, and was last trading at $1.2407, down 0.33 percent.

"Sterling will be incredibly sensitive to (Brexit) negotiations and will offer a clear gauge of how things are panning out. We could see it move lower still if negotiations take a sour turn - $1.10 is feasible," said Neil Wilson, senior markets analyst at ETX Capital.

Benchmark U.S. Treasury yields fell. The 10-year U.S. Treasury yield hit a session high at 2.427 percent, higher than Tuesday's. Benchmark 10-year notes (US10YT=RR) last rose 6/32 in price to yield 2.3891 percent.

Oil prices rose after U.S. gasoline stockpiles dropped sharply last week, while crude inventories grew less than anticipated.

U.S. crude (CLc1) last rose 1.9 percent to $49.28 a barrel and Brent (LCOc1) traded at $52.23, up 1.8 percent on the day.

© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York

Spot gold rose 0.0 percent to $1,251.59 an ounce. U.S. gold futures fell 0.3 percent to $1,251.30 an ounce.

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