Market wrap: A surge in oil and a late recovery on Wall Street point to a positive start to the local trading day.
Disappointing earnings reports from Wall Street giants Citigroup and Goldman Sachs cast a cloud over early trading in the U.S. as investors fretted over the implications for the rest of this reporting season. But stocks inched higher as the session progressed, paced by the energy sector. The Dow closed at a new 2009 high, up 0.47% to 10,063. The S&P 500 put on 0.41% and the Nasdaq 0.05%.
Goldman beat analyst expectations but was sold off on heightened expectations after JP Morgan Chase's knockout quarter. Citigroup shares dumped more than 5% as it continues to rack up huge credit losses. The financial sector finished nearly 1% lower. Energy stocks were the day's standout, closing 1.5 - 2% higher.
European markets were mixed but mainly lower. France's CAC bucked the trend at +0.03% but Britain's FTSE lost 0.63% and Germany's DAX 0.4%.
Crude oil rallied to a one-year high after a surprisingly big drop in U.S. gasoline inventories as refineries slashed production. Gasoline inventories fell by 5.2 million barrels in the week ended October 9 against analyst expectations of a modest rise. Gasoline production in the U.S. last week fell to the lowest level since last September. The news sent crude oil futures up more than 3% to recently trade at $77.59 a barrel.
A rebound in the U.S. dollar sent gold down 1.3% and below $1,050 for the first time in a week. The spot price was recently at $1,048.80.
Copper continued to rise after Wednesday's positive Chinese import figures but other base metals were mixed and trading within recent ranges. Copper rose 1.3%, lead 0.67%, nickel 2.12% and zinc 0.44%. Aluminium slipped 0.37% and tin lost 1.39%.
Futures traders expect our market to open in positive territory. The SPI futures index was 17 points stronger at 4885.
TRADING THEMES TODAY
OIL: The breakout is now confirmed. With last night's slump in U.S. inventories, the stars seem to be aligned for a run to $80 in the short term.
WILDCARDS: Google and IBM reported after the closing bell in the US. Well-received earnings reports from either could set US futures running, just as Intel did earlier this week. The early reaction to the results was mixed - Google up, IBM down. Watch US futures for developments.
ECONOMIC NEWS: Nothing significant on the local calendar but Fridays are nearly always busy nights in the U.S. Tonight: consumer sentiment, industrial production, treasury flows and manufacturing capacity utilisation.
