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US stocks rise again, oil rallies ahead of Opec meeting

/ 07:46 AM May 23, 2017
An Iraqi labourer works at an oil refinery in the southern town Nasiriyah on October 30, 2015. South Oil Company (SOC) has raised production at Nasiriyah oil field from 40,000 barrels per day to between 65,000 and 70,000 barrels as it aims to reach 100,000 barrels by the end of next month.  AFP PHOTO / HAIDAR MOHAMMED ALI / AFP PHOTO / HAIDAR MOHAMMED ALI

An Iraqi laborer works at an oil refinery in the southern town Nasiriyah on October 30, 2015. Oil prices strengthened on Monday, May 23, 2017, after Iraq it would extend production cuts ahead of a meeting of Opec. AFP 

NEW YORK, United States — US stocks continued to rebound from last week’s rout on Monday, rising for the third straight session, while oil prices strengthened ahead of a closely-watched Opec meeting.

European stocks finished modestly lower, while Tokyo and Hong Kong both gained.

Continued US economic optimism was reflected in a new survey showing executives in the manufacturing and services sector expect to see increased revenue, hiring and capital spending in 2017, according to the Institute for Supply Management.


Analysts also cited the just-completed strong corporate earnings season and solid economic data as factors that have permitted the market to look past any worries about President Donald Trump’s agenda after a series of stumbles and scandals. And with Trump out of the country on his first foreign trip, there has been little news to worry investors.

US stocks plunged on Wednesday over White House controversies, but have recovered since then.

“We rallied into Friday and it feels as if we’ve got momentum carrying us forward with the understanding that things are perhaps not as terrible as they looked on Wednesday and fundamentals are still intact,” said Art Hogan, chief market strategist at Wunderlich Securities.

Meanwhile, oil prices strengthened ahead of Thursday’s meeting of the Organization of the Petroleum Exporting Countries. Iraq endorsed a nine-month extension of a production pact.

That came after Saudi Arabia’s energy minister Khalid al-Falih on Sunday expressed confidence in the possibility of extending the agreement to limit output between Opec and Russia.

“The big event of the week will be the Opec meeting in Vienna, and we have seen early strength in oil prices as a result,” said Chris Beauchamp, chief market analyst at IG trading group.

“Still, there needs to be some sizeable production cuts coming down the line, both in size and length of time, to force a further rally in oil prices, which have already gained 16 percent from their low earlier this month.”

Defense shares rise

US defense shares rallied after Trump announced a $110 billion arms deal sale to Saudi Arabia during his visit to the country over the weekend. Dow member Boeing rose 1.6 percent, Lockheed Martin 1.5 percent and Raytheon 0.6 percent.


Ford advanced 2.1 percent after the company announced a management shakeup, replacing the CEO and senior executives amid declining sales in the US and Chinese markets. The move comes as Ford faced pressure from investors over its weak share price.

Meanwhile in Brazil, shares in JBS, the world’s biggest meatpacking company, plummeted 31.3 percent amid a corruption scandal involving executives and Brazilian President Michel Temer.

Temer is fighting for his political life after revelations that he met with JBS executive Joesley Batista and allegedly discussed paying hush money to a politician jailed for corruption. CBB

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TAGS: Business, oil, oil production cut, OPEC, US stocks, Wall Street
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