Wall St rallies as oil surges towards $US50 a barrel

The ASX is set for a positive open after US stocks gained ground and crude oil lifted towards $US50 a barrel.

A rising oil price gave a boost to US stocks. Picture: AP Photo/Mark Lennihan, File.

US stocks rose Wednesday as US crude-oil prices surged toward $US50 a barrel.

But in Europe, equities fell as concerns rose about the European Central Bank moving to trim its stimulus program.

The Australian share market is set to take Wall Street’s lead and rise this morning, with ASX futures up 27 points at 7.20am (AEDT).

Energy shares led gains in the S&P 500 along with financials, which have rallied this week. Major US indexes fell in the previous two sessions as investors sold some of this year’s biggest gainers, including income-generatingstocks. Telecommunications, real-estate, utilities and consumer-staples companies all fell Wednesday.

Recent declines in those sectors has helped make energy the best performer in the S&P 500 year to date, with a gain of roughly 16 per cent.

Energy shares rose 1.4 per cent Wednesday as US crude oil jumped 2.3 per cent to $US49.83 a barrel following a US crude-inventory report that showed another decline in stockpiles.

Oil prices have risen since the Organization of the Petroleum Exporting Countries tentatively agreed a week ago to cut production.

The Dow Jones Industrial Average rose 113 points, or 0.6 per cent, to close at 18281. The S&P 500 rose 0.4 per cent, and the Nasdaq Composite gained 0.5 per cent.

The yield on the benchmark 10-year Treasury note rose for a fourth consecutive session. It closed at 1.718 per cent, compared with 1.683 per cent Tuesday and 1.55 per cent in late September.

Pressured by years of ultralow rates, investors have turned to stocks — particularly in dividend-paying sectors like utilities and telecommunications — for income instead of bonds as yields around the world sank lower, said Adrian Cronje, chief investment officer at Balentine LLC. “The psychology for much of this year had been turned on its head.”

But recent decisions by the European Central Bank and Bank of Japan, while accommodating, indicate that central-bank policy will no longer be “expansionary at all costs,” said Mr Cronje. In the US, a string of solid economic indicators is building investor consensus that the Federal Reserve will raise rates before year-end, he said.

“The stronger economic data is provoking a rotation in the equity market, “ said Mr Cronje. “It’s a return to normalisation of the markets.”

On Wednesday, a gauge of US service-sector activity rose to its highest level since October 2015. Earlier this week, the Institute for Supply Management’s manufacturing index showed a return to growth in September.

The Stoxx Europe 600 fell 0.5 per cent after six straight sessions of gains, with real estate and utilities companies among the worst performers.

Japan’s Nikkei Stock Average rose 0.5 per cent as a weaker yen supported shares of export-heavy car makers, while the Hang Seng rose 0.4 per cent. The dollar was recently up 0.7 per cent against the yen at Yen103.563.

Australia’s S&P/ ASX 200 fell 0.6 per cent as mining companies took a hit from gold’s steep fall in the previous session. Markets in China were closed.

Dow Jones