Oil Prices Lift Stocks Despite Lingering Trade Concerns – Wall Street Journal

U.S. futures held steady Wednesday, while European stocks inched higher as energy companies gained following a bump in oil prices.

The moves came even as markets in the Asia-Pacific region mostly headed lower on lingering trade worries.

Futures pointed to a roughly flat opening for the S&P 500 a day after a jump in energy stocks sent the index higher.

The Stoxx Europe 600 was up 0.3% recently, with higher commodity prices helping to provide some upward momentum. The Stoxx Europe 600 oil & gas subindex rose 1.3% and the basic resources subindex climbed 1.4%.

That came as Brent crude oil rose 0.3% to $79.33 a barrel, building on Tuesday’s sharp increase on continuing turmoil in Libya and as Hurricane Florence threatened the east coast of the U.S.

Crude prices are up 3.3% this week and nearly 9% from a month ago as supply outlook has tightened partly due to sanctions curbing output from Iran. In metals, copper futures prices were up 0.7% at $5,914.50 a ton.

Elsewhere in Europe, shares in retailers notched gains. Hermès International SCA was up 3% after the French luxury-goods company posted a rise in profit in the first half of the year.

A humming U.S. economy has helped stave off deeper losses among shares of American companies, but markets in Europe and Asia haven’t been so fortunate.


Photo:

Michael Nagle/Bloomberg News

Concerns over the impact of an escalating trade conflict between the world’s two largest economies have been pressuring overseas markets.

“There’s quite a lot more macro uncertainty, and a lot that has to do with the trade-war fears,” said Isabelle Mateos y Lago, chief multiasset strategist at BlackRock. “It’s not an environment in which many people are enthusiastic about taking risk.”

News Tuesday that China will ask the World Trade Organization for permission to impose sanctions on the U.S. rattled investors, coming days after President Trump said he was prepared to impose a third round of tariffs on $267 billion of Chinese goods.

Ms. Mateos y Lago said she favors U.S. equities in the current environment, adding that U.S. companies have “more dynamic earnings [and] more dynamic sales growth.”

Robust U.S. growth and corporate earnings have helped buoy U.S. stocks, even as many of the more export-orientated markets in Europe and Asia have struggled amid trade tensions and concerns over the resilience of developing economies. The S&P 500 is up 8% this year, while the Stoxx Europe 600 is down 3.3% and the MSCI Emerging Markets index has fallen over 13%.

In the Asia-Pacific region, Hong Kong’s Hang Seng Index continued to slide Wednesday, declining 0.3%, after entering bear market territory—commonly defined as a drop of 20% from a recent high. China’s Shanghai Composite fell 0.3%, taking year-to-date losses to almost 20%. The Nikkei Stock Average was down 0.3%.

The yield on the 10-year Treasury note declined to 2.960%, according to Tradeweb, from 2.979% on Tuesday. Bond investors will be looking ahead to meetings from the European Central Bank and Bank of England on Thursday, where officials are expected to keep interest-rate changes on hold.

Investors will also be watching if Turkey’s central bank raises interest rates Thursday to rein in inflation amid the collapse of the lira. Turkey has led the downward lurch in emerging markets in recent months, raising concerns over a broader malaise in developing economies.

“The question is whether the Turkish central bank can take the right policy [decision] and calm some of the volatility,” said Mohammed Kazmi, a portfolio manager at Union Bancaire Privée.

“This theme of emerging markets being under pressure isn’t necessarily going away.”

The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, was roughly flat. A stronger dollar has been another factor weighing on emerging markets recently, pressuring foreign governments and companies that have borrowed in dollars.

Gold was down 0.3% at $1998.40 an ounce.

Write to Christopher Whittall at christopher.whittall@wsj.com