New | Oil set for biggest weekly gain since 2011 while European stocks provide value
Oil approached its biggest weekly advance in more than four years, sustaining a rebound above US$40 a barrel amid signs of a strengthening economy in the United States, the world’s biggest crude-consuming country.
Futures climbed a second day, extending a 10 per cent rally on Thursday that was the biggest in more than six years. US consumer purchases climbed in July as incomes grew, showing the biggest part of the nation’s economy was off to a good start in the second half of the year. This comes on the heels of data showing spending and the overall economy did better than previously estimated in the second quarter.
Prices fell on Monday to the lowest close since February 2009 after a slump in Chinese stocks sent ripples through global financial markets. Crude is still down more than 20 per cent this year on concern a supply glut will persist.
European stocks provide value after storm
As the dust settles after one of the most dramatic weeks for global markets since the financial crisis, attractive valuations and high yields in European equities suggest that a recent rebound has further to go.
Some strategists are downgrading earnings forecasts, but euro zone stocks with domestic exposure are expected to hold up relatively well.
Financial services and telecommunications and pharmaceutical companies that pay hefty dividends are likely to benefit the most after the sell-off. The hardest-hit stocks, such as mining companies, are recommended only for the brave.
US treasuries gain, stocks fluctuate as Fed meets in volatile week
Treasuries rose and stocks fluctuated as Federal Reserve officials met and investors reassessed the outlook for markets at the end of a turbulent week.
Equities trading has been whipsawed by gains and losses this week, indicating markets remain subject to sudden shifts in investor sentiment. The Standard & Poor’s 500 Index was little changed after the US benchmark’s biggest two-day gain since the beginning of the bull market in 2009.
“The market just may be tired. We had an awful lot of actions,” said Cam Albright, head of investment strategy at Wilmington Trust in Baltimore. The firm oversees US$76 billion. "There has been a lot of price action in both directions, perhaps traders just [want] a chance to catch their breath.”
Fed officials are weighing when to begin raising interest rates for the first time since 2006.
Global equities lost as much as US$$8.4 trillion in value after China’s unexpected devaluation of the yuan on August 11 spurred concern the world’s second-biggest economy was on the brink of a deeper slowdown, damping demand for raw materials and spurring a selloff in developing economies.
BNY Mellon glitch roiled pricing on US funds with US$404b in assets
BNY Mellon Corp’s computer glitch this week has disrupted pricing on nearly 5 per cent of US mutual funds and exchange-traded funds with about US$404 billion in assets, according to data from Morningstar and Lipper.
An accounting system BNY Mellon uses to calculate fund values collapsed last weekend during an upgrade conducted by financial services software provider SunGard.
Problems with fund pricing escalated throughout the week, increasing nearly ninefold between Monday and Thursday, according to Morningstar figures. BNY Mellon said on Friday it still does not know when the problems with mutual fund pricing will be fixed.
Aberdeen joins Eu-wide alternatives assets market with fund
Aberdeen Asset Management, a US$483 billion investment firm based in Britain, started its first alternatives fund that can be marketed across the European Union as it seeks to grow business with clients seeking protection from declines in the stock and bond markets.
The US$500 million Aberdeen Alternative Strategies Fund, which invests mainly with hedge funds, started this month and has “attracted significant early investment”, the company said in a statement on Friday.
Such funds, which can also include managed futures, real estate, commodities and derivatives, are becoming more popular among customers concerned about the price level of fixed income and equities, it said.
