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Firm Crude Oil Market Helps Trigger Late Session Equity Rally

James Hyerczyk from at 09/10/09


Stock index futures made new highs for the year as appetite for risky assets picked up late in the trading session.  The markets traded firm most of the day, buoyed by a better than expected U.S. Weekly Initial Claims Report.  After trading in a range throughout the midsession, upside activity picked-up following a better-than-expected oil inventory report sent oil stocks higher. 


The U.S. Dollar finished the day lower against most major currencies.  The Dollar lost ground versus the Euro as record low interest rates in the U.S. made the Euro Zone currency a more attractive investment.  Traders are beginning to factor in the possibility that the U.S. will be one of the last nations to raise interest rates. 


The September British Pound posted a strong gain versus the Dollar after the Bank of England voted to leave its benchmark interest rate unchanged at 0.50% and its quantitative easing program untouched.  The latter could be a sign that BoE members believe its stimulus buying is helping to achieve economic stability in the U.K.


December Treasury Bonds and Notes finished the day stronger boosted by better than expected demand for Treasury Bonds at today’s $12 billion 30-Year Bond auction.  The auction drew a better than forecast yield of 4.238%.  The strong demand suggests that bond investors are not fearful the Fed will begin raising interest rates anytime soon.


December Gold opened sharply lower this morning but erased those losses by the close to finish higher.  The early forecast of a stronger Dollar pressured the gold market before the New York opening, but the Dollar began to weaken early following a better than expected U.S. Weekly Initial Claims Report.  This helped encourage buying in the gold market which gradually increased throughout the day.  Later in the day, gold received a boost from a friendly crude oil report.


December Crude Oil finished the trading day higher. Early support came following the announcement that OPEC would not make any major changes to the supply and demand picture.  Crude oil began to firm at about the midsession of the trading day following the announcement of a larger than expected drop in inventories.  Oil prices received additional support following an International Energy Report that predicted an increase in global oil demand. 

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