Market Reports

US pre-open: New York to kick-off stronger on oil rally and Fed’s rate ‘patience’

US stocks look set to notch up hefty opening rises, says Kam Patel, as they build on gains made in the previous session.


US stocks look set to notch up hefty opening gains, building on the Dow Jones and S&P 500's best day's gain in 2014 during the previous session.

The positive response follows the Federal Reserve yesterday giving an upbeat take on the US economy, but at the same time saying it will be "patient" over the timing of the first rate rise.

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Jasper Lawler, analyst at CMC Markets, notes that oil prices are rallying, with Brent crude having found an interim base at $58.50 just below the $60 forecasted by multiple oil ministers. "The prospect of lower upstream investments after multiple oil companies announced capital expenditure budget cuts for 2015 has prompted enough speculators to position for a rebound that the downtrend has paused for now," he says.

Lawler adds: "The Fed wasn't exactly dovish yesterday. It just removed some uncertainty that had crept into markets after the very strong non-farm payrolls that a rate-hike was right around the corner.

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"The Fed, higher oil prices lifting energy shares and news of a historic resumption of diplomatic ties with Cuba have all lifted investor sentiment that had become extremely bearish recently."

On the corporate front, Sony shares are likely to be in sharp focus after the company pulled its planned Christmas debut of "The Interview", a comedy film about a plot to kill North Korea's leader. The cancellation follows several major cinema chains declining to screen the film following threats from the hacker group, Guardians of Peace.

Software group Oracle notably advanced 5.1% in pre-market trade after it posted late yesterday better than forecast first quarter profits and sales. It also struck an upbeat note on outlook.



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