Energy Prices Spark Stock Rally
Today’s Spotlight Market ?
Stock futures followed up their best week of the year thus far with another strong showing on Monday. It seems as though the battered equity, raw material and energy markets have attracted some buying from traders who thought the sell-offs in these markets were excessive. Traders? appetites for risk has grown, but will this trend continue moving forward? It seems as though some of this risk has been driven by the decision by Russia and Saudi Arabia to freeze Crude Oil production levels, but traders have been pondering whether or not this will be enough to maintain a rally in petroleum prices. The Oil market is oversupplied with production maintaining its current levels, so it will be interesting to see if this Oil rally has any legs.
Fundamentals
Equity and energy markets have been almost mirror images of one another to start the year, so it may be prudent for stock traders to keep tabs on developments in Crude Oil in the near-term. Energies have not been the only driver of stocks in recent sessions. Earnings have been better than the diminished expectations, and there is some renewed optimism from China. Xiao Gang, chairman of the China Securities Regulatory Commission, was relieved of his duties after overseeing the meltdown of the Shanghai Composite Index. The effects of the stock market rout were felt around the globe and set off a domino effect of falling global equity indices. Investors welcomed his replacement, Liu Shiyu, who had previously served as chairman of the Agricultural Bank of China and was a deputy governor at the People?s Bank of China. While this move can be viewed in a positive light and may help China?s stock market repair, there are still many issues facing the Chinese economy, which threaten to derail recoveries in the US and Europe. The latest red flag comes in the form of an overcapacity warning, which threatens Chinese manufacturing. In the US, Chicago area manufacturing picked up more than expected, offering a bit of positive economic news.
——————————————————————————————————
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control. Derivatives involve substantial risk and are not appropriate for all investors. Please read the “Disclosure Statement for Futures and Options” prior to investing in futures or options. For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and other risks apply.