New York – Wall Street stocks resumed their upward climb on Thursday following a brief pullback while oil prices declined after Angola quit the OPEC oil cartel.
US stocks had on Wednesday suffered a rare setback after the market’s largely unbroken ride higher since late October.
But after the brief retreat, all three major indices rebounded, finishing up about one percent.
“The market is extremely overbought,” said Tom Cahill of Ventura Wealth Management.
“And when you have situations where the market gets overbought like this and it doesn’t sell off, that’s a very good indication that it’s in a strong uptrend.”
US equities have driven higher since late October, as inflation moderated and the Federal Reserve flagged plans for 2024 interest rate cuts. The current buoyant period also comes during a seasonally strong period for the market.
A stream of US data in recent weeks has shown inflation continues to slow and the jobs market is softening. Other economic indicators suggest the US central bank is on course to bring prices under control while averting a recession.
Eyes are now on Friday’s upcoming release of the personal consumption expenditures (PCE) price index, the Fed’s preferred gauge of inflation, which could be key for its next meeting in January.
“A higher-than-expected core US inflation reading tomorrow could tip us back into fretting about rates being higher for longer,” said AJ Bell investment director Russ Mould.
Meanwhile, Angola announced it would leave the Organization of the Petroleum Exporting Countries over a disagreement on production quotas.
“We feel that at this moment Angola gains nothing by remaining in the organization and, in defence of its interests, it decided to leave,” said Mineral Resources and Petroleum minister Diamantino Azevedo in a statement.
Azevedo told state broadcaster TPA that Angola is unhappy with OPEC’s decision last month to further slash production next year in an effort to prop up volatile prices.
“We think the time has come for our country to be more focused on our goals,” he told state broadcaster TPA.
“If we remained in OPEC… Angola would be forced to cut production and this goes against our policy of avoiding decline and respecting contracts.”
The announcement caused a further drop in oil prices already weighed down by expectations of sluggish economic demand. The main international and US crude contracts fell more than 1.5 percent before trimming their losses.
On other markets, European indices ended the day lower.
Asian indices struck a mixed note although Tokyo tumbled after Toyota announced a recall of a million vehicles, and its subsidiary Daihatsu decided to suspend shipments of all models over rigged safety tests.
Key figures around 2140 GMT
New York – Dow: UP 0.9 percent at 37,404.35 points (close)
New York – S&P 500: UP 1.0 percent at 4,746.75 (close)
New York – Nasdaq: UP 1.3 percent at 14,963.87 (close)
London – FTSE 100: DOWN 0.3 percent at 7,694.73 (close)
Paris – CAC 40: DOWN 0.2 percent at 7,571.40 (close)
Frankfurt – DAX: DOWN 0.3 percent at 16,687.42 (close)
EURO STOXX 50: DOWN 0.2 percent at 4,524.86 (close)
Tokyo – Nikkei 225: DOWN 1.6 percent at 33,140.47 (close)
Hong Kong – Hang Seng Index: FLAT at 16,621.13 (close)
Shanghai – Composite: UP 0.6 percent at 2,918.71 (close)
Euro/dollar: UP at $1.1013 from $1.0942 on Wednesday
Dollar/yen: DOWN at 142.14 yen from 143.57 yen
Pound/dollar: UP at $1.2690 from $1.2639
Euro/pound: UP at 86.76 pence from 86.57 pence
West Texas Intermediate: DOWN 0.4 percent at $73.89 per barrel
Brent North Sea crude: DOWN 0.4 percent at $79.39 per barrel
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Source: AFP
Picture: Pixabay
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