Oil rally and Greek progress drive stock markets upward

Crude oil has gone back into rally mode with Brent surging 4.4% and WTI gaining 2.8%. Supply disruptions in Libya have powered Brent’s outperformance, but WTI’s performance also looks quite strong amid reports that some oil sands companies have already started to move toward resuming operations with the wildfires moving away from their facilities. A report from the Energy Information Administration suggesting the US market may be coming back into balance also appears to be driving gains. The EIA suggested US oil production slowed to 9.0 mmbbl/d down 100K bbl/d from March and at the same time, the agency raised its US 2016 global oil demand forecast by 270K bbl/d. Oil may remain active overnight and into tomorrow between the weekly API and DOE US inventory reports.

In addition to rising energy prices, news that the EU has come up with a three stage pathway toward debt relief for Greece also helped to propel markets higher Tuesday. After Greece passed its latest round of reform measures, Eurogroup finance ministers indicated they are looking at a three stage process involving debt management, longer grace and payment periods and additional assistance over 2-3 years.

Any chain is only as strong as its weakest link, and Greece’s ongoing financial problems have been dragging on the Euro project for several years now. The potential for progress toward a real solution for Greece, along with rising energy prices sparked a broad based rally for stocks. While materials and energy have been leading the charge, clawing back a good chunk of yesterday’s losses, banks have also benefitted as their risk exposure to Greece and to resource producers eases a bit.

Renewed enthusiasm for resource stocks in North America may carry through to today’s Australia trading. Japanese stocks, meanwhile, may continue to benefit from the retreating Yen which has taken much of the recent pressure off.


Corporate News

Electronic Arts    $0.50 vs street $0.42, sales $924M vs street $888M, guides next Q EPS to ($0.05) below street $0.19

Walt Disney    $1.36 vs street $1.39, sales $12.97B below street $13.20B

Economic News

Significant announcements released overnight include:

China foreign investment    6.0% vs street 5.0% and previous 7.8%

UK NIESR 2016 GDP Forecast     cut to 2.0% from 2.3%

UK same store sales        (0.9%) vs street 0.5%
UK trade balance         (£3.8B) vs street (£4.2B)

Germany industrial production    0.3% vs street 1.1%
Germany trade balance        €26.0B vs street €20.6B


Upcoming significant economic announcements include:

(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)  

10:30 am AEST        Australia consumer confidence        previous 95.1

9:30 am BST        UK industrial production            street (0.4%)
9:30 am BST        UK manufacturing production        street (1.9%)

8:45 am EDT        Bank of Canada Wilkins speaking

10:30 am EDT        US DOE crude oil inventories        street 0.75 mmbbls
10:30 am EDT        US DOE gasoline inventories        street (0.5 mmbbls)