Steady rise in price of oil on Tuesday triggered the rise of the US stock indices. Dow Jones Industrial Average rose by 222.44 points or by 1.3%, Nasdaq Composite – by 59.67 points or by 1.3%, S&P500 – by 25.70 points or by 1.2%. Recently, after sharp decline and recovery this year, daily change in stock indices was not big, in average it is not more than 1%. Therefore, yesterday’s rise has been the highest since 11 March.

Fires in Canada have forces some companies to reduce oil production in the region. The reduction amounted to 25% of the total production in the country. Canada is the largest supplier of oil in the global market. The country ranks the third in the proven oil reserves after Saudi Arabia and Venezuela. The decline of oil amounted to 1.6 barrels per day or over 1% of the world supply. Canada is the largest oil exporter in the United States.

The increase in stock prices of energy sector companies, comprising S&P500, amounted to 18%, which is higher than in other sectors. All 10 sectors in the composition of the S&P500 have grown on Tuesday.

To date, index S&P500 has won back all the losses sustained from the beginning of this year. Positive medium-term dynamics and the rise in index may continue amid low expectations of the increase in interest rate in the USA.

Today’s economic calendar is uneventful. According to the report of API released late last night, US oil reserves have increased by 3.4million barrels, reaching new historic highs. Today at 16:30 (GMT+2), US Department of Energy will release oil inventories data. It is expected that oil reserves in the USA have increased by 500 000 barrels last week.

The increase in the US oil reserves will keep oil prices down. It is likely that after yesterday’s rapid rise, the index S&P500 will go down due to profit taking and decline in oil prices prior to the release of the data on the US oil reserves.

Today, the rise in price of gold and high demand for the Yen shows that investors try to avoid risks and reluctant to buy risky stock market assets.

S&P500: American stock indices went up.  Fundamental analysis of 11.05.2016.




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