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US Markets Edge Higher; Continued Volatility in the Commodities Sector

US Markets Edge Higher; Continued Volatility in the Commodities Sector
Dec 22, 2015 By Imran Valibhoy

U.S stocks rallied slightly higher upon the closing of yesterday’s trading. The S&P 500 surged 15.60 points, or 0.8%, to 2,021.15. Likewise, the Dow Jones Industrial Average rose 122.87 points, or 0.7%, to 17,251.42. The NASDAQ edged 0.93% higher, to 4,968.29 points.

The energy sector finished in the green in yesterday’s trading, even with the continued rout in oil prices, with WTI futures for February delivery falling 0.7%, to $35.81 a barrel, along with the re-opening of some US oil rigs. Similarly, the Telecoms and technology sectors gained more than 1% upon the close of yesterday’s trading.

Investors are still trying to assess the implications of last week’s interest rate hike. With the U.S Federal Reserve hiking rates a quarter of a percentage, to 0.25% - 0.5% for the first time since 2006 at the conclusion of their December 15th-16th meeting, the FOMC (Federal Open Market Committee) is looking to gradually continue hiking rates over the course of 2016 and beyond, upon condition that the U.S economy is in the right shape.

In Europe, the majority of the region’s major indexes closed in the red. The FTSE 100 in London contracted 17.58 points, or 0.29%, to 6,034.84. Likewise, the German DAX was down 110.42 points, or 1.04%, to 10,497.77 points. Similarly, the European Stoxx 600 finished 0.8% lower. Upon news of the continued political uncertainty within the Spanish parliament, the Spanish Ibex 35 finished 3.5% lower.

In Asia, the Shanghai Composite finished 63.51 points higher, or 1.77%, to 3,642.47 points, upon speculation that the central government will make the necessary efforts to reform the economy. In contrast, Japan’s Nikkei index finished 70.78 points, or 0.37% in the red, to 18,916.02 points, amid Toshiba’s announcement that it will post a 550 billion yen (A$6.3 billion) loss, causing the share to drop more than 9%.

In Australia, the S&P 200 edged 0.15% higher, to 5,116 points, with energy sand resource stocks leading the gains in response to a rise in the Iron ore price above US$40 a tonne. In contrast, the healthcare sector was one of the weakest performers yesterday, with negative sentiment centred on proposed budget cuts for X-rays and blood tests.

Mining giant BHP Billiton (ASX:BHP), along with Brazilian miner Vale, had their Brazilian assets frozen, following a verdict by a judge in the Minas Gervais region, in response to the Samarco mining disaster. The Brazilian government attributes the overall cost of the disaster at $US5.5 billion, further blurring sentiment amongst the mining giant, which has lost over 36% for the year. 

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Imran Valibhoy Author: Imran Valibhoy Dec 22, 2015

Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.

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