Stocks rose 228 today to close at 16,620. Trading volume was very light. Today’s move higher was attributed to rising oil prices and a strong US dollar.
Business activity in Europe hit a 13 month low as the PMI index, which is still showing growth, fell to 52.7 from 53.5 in January. The reading missed expectations by a wide margin and according to Chris Williamson, Chief economist at Markit, will greatly increase the odds of more ECB stimulus. Meanwhile Britain will vote on June 23 whether to leave or stay in the EU. “Brexit” supporters cite fears over “BB creep” or Brussels Bureaucracy creep in which top down laws and regulations are overriding local gubment and voter control. The British Sterling fell hard on news of the vote and could stay under pressure as the election nears.
Low oil prices are causing sovereign wealth funds from Dubai, Russia, Saudi Arabia etc. to sell assets built up during the days of $100 per barrel oil and use those proceeds to close budget gaps. It was reported in Bloomberg that even Norway, beneficiary of North Sea oil, will make the first ever withdrawal from its oil reserve fund this year. Let’s hope when it’s all over they still have something “lefse” over! Experts think $700 billion could be taken from sovereign wealth funds this year if oil prices stay in their current range.
WTI crude today gained 6.2% to $31.33 per barrel as the IEA made a forecast calling for lower US shale production for this year and next. An interesting factoid however is that while the rig count is now at its lowest level since 2009, (413) areas like the Bakken, Utica and Eagle Ford shale formations are seeing higher production (+32%,+83%, +22%) than this time last year because owners are keeping the best wells and best crews operating while shutting the marginal performers.
Gold was battered by a strong US dollar and fell 1.8% or $23 an ounce to close at $1,207.
The lunkheads this weekend proved worthy. They were miserable but still had smiles.