Based on the trajectory of global markets today, it is unlikely that the U.S. stock market will rally strongly today. However, a oil prices have not fallen substantially back down following a report from International Energy Agency (IEA) that spurred a 7% rally yesterday, so it looks like equity gains may be maintained instead of quickly fading as they have done throughout this month and last.
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Losses limited
During the early premarket hours, S&P 500 Futures quickly erased losses from 0.22% to 0.04% as they hovered near 1,935.50. Nasdaq Futures also showed signs of revival as they pared losses to an extent but remained slightly in the red by 0.19% to 4,206.75. U.S. markets had closed sharply higher yesterday. Even European indices pulled back from steep losses as oil jumped back into positive territory.
IEA head Fatih Birol’s comments have revved up interest in oil as he said that producers could further reduce their spending in 2017, which will help alleviate the oversupply situation in the forthcoming years. Based on this outlook, IEA expects oil prices to double by 2020 and could return to $80 per barrel. The statement sent West Texas Intermediate prices over 7% before retreating to only 6.21% higher for the day. Brent Crude are passed the $34.50 mark.
Global Developments
Meanwhile, Asian markets booked losses following slightly softer oil prices earlier during the day. The low reference rate for the yuan set by People’s Bank of China added to worries. European shares were also down throughout the day after a slew of data pointed to poor economic health in the region. German business confidence slipped in February, leaving a negative impact on the markets.
Up ahead in the day, market participants will turn to the February consumer confidence index, which is due to be released today. At the same time, home sales data will also be a key statistic to evaluate the strength of the economy. Commentary from the Federal Reserve will also remain under the spotlight as traders will try to understand the future path of the Central Bank, though the Fed itself may not have any concrete plan as it is entirely data dependent itself.