On 22 February, 2016 – Stocks rallied globally

Energy stocks advanced on surging crude oil prices. 

United States

Stocks rallied as the crude oil surged. Both the Dow Jones industrials and S&P were up 1.4 percent while the Nasdaq added 1.5 percent.

Marathon Oil, Chevron and Diamond Offshore Drilling gained. Lumber Liquidators plunged after the US government said people exposed to some types of its laminate flooring were more likely to get cancer than it had originally predicted. Chemicals and mining companies also were up as investors interpreted the increased price of oil as a sign the global economy is solid. Alcoa, Freeport-McMoRan, a copper producer and oil company, has nearly doubled in value since it hit decade lows in mid-January. Consumer stocks also made large gains. The biggest increase was in shares of Amazon. Home Depot gained.

Automakers including GM and Ford were higher. Starbucks gained after the coffee chain said it would change its rewards programs so shoppers who spent less money would get fewer rewards. Data center operator Equinix said it would buy its European competitor, TelecityGroup, for $3.3 billion. Equinix has more than 100 data centers in 15 countries and will gain TelecityGroup’s 39 facilities in 11 European countries. Sysco Corporation said it would buy Brakes Group for $3.1 billion. UnitedHealth and Humana climbed after the government released a policy update for a major type of plan. Botox maker Allergan climbed after the company’s quarterly results surpassed projections.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$20.15 to US$1,211.00. Copper futures were up 1.85 percent to US$2.12. WTI spot crude was up US$1.84 to US$31.48. Dated Brent spot crude was up US$1.72 to US$34.73. The US dollar was up against the euro, pound, Swiss franc and yen. However, it retreated against the Canadian and Australian dollars. The Dollar Index was up 0.6 percent. The yield on US Treasury 30 year bond was up 1 basis point to 2.61 percent while the yield on the 10 year note was up 2 basis points to 1.76 percent.

Europe

Stocks rallied Monday following the strong performance in Asia. Rising crude oil prices provided an early boost to investor sentiment. Mining and resource stocks jumped due to rising iron ore prices. Investors largely shrugged off "Brexit" fears, but will keep a close eye on recent developments. The FTSE was up 1.5 percent, the CAC gained 1.8 percent, the DAX jumped 2.0 percent and the SMI added 1.2 percent.

UK Prime Minister David Cameron struck a reform deal at a European Union summit late Friday that would give the UK "special status" in the EU. Meanwhile, London Mayor Boris Johnson announced over the weekend that he would campaign for a British exit from the EU. Cameron has set a June 23 date for referendum on Britain's membership of the EU.

E.ON climbed after the utility warned last week that the downturn in the energy industry is a "reality check" and its dividend policy many not be sustainable. RWE also increased. ThyssenKrupp and Salzgitter advanced. Automakers Volkswagen, Daimler, BMW, Renault and Peugeot finished higher. Banks including Deutsche Bank, Commerzbank, Société Générale, BNP Paribas and Crédit Agricole were higher on the day. Total and Technip gained.

In London, Home Retail Group surged on reports that Sainsbury is seeking an extension of its Tuesday's deadline to make a formal proposal after the emergence of a rival offer from Steinhoff. Associated British Foods advanced. In its pre-close trading update ahead of its interim results due on April 19, the company said that it now expects only a marginal decline in full-year adjusted earnings. HSBC Holdings tumbled after it posted an unexpected fourth-quarter loss after booking fair-value losses on its own debt. Mining stocks rallied as iron ore prices increased. Glenore, Anglo American, BHP Billiton, Rio Tinto and Antofagasta rallied. Royal Dutch Shell, BP and Tullow Oil gained.

The Eurozone February flash composite purchasing managers' index declined to 52.7 from 53.6. This was the lowest reading since January 2015. Germany’s PMI also was weaker in February with a reading of 53.8, down from 54.5 in January. France slipped into contraction with a reading of 49.8.

Asia Pacific

Most Asian shares advanced Monday, extending last week's advance. The yen weakened after the release of disappointing manufacturing data, oil prices stabilized and investors welcomed news over the weekend that China's top securities regulator has been replaced. Brexit fears and caution ahead of the meeting of Group of 20 finance ministers and central bankers taking place later this week served to limit the upside to some extent in markets outside China. Oil prices rose in Asia, supported by data showing a decline in the U.S. rig count and media reports quoting Russia's Energy Ministry that a deal to curb a flood of supply would be concluded by March 1.

The Shanghai Composite added 2.3 percent and the Hang Seng was 0.9 percent higher. Sentiment was lifted after China removed the head of its securities regulator, Xiao Gang, and replaced him with Liu Shiyu, a veteran of China's central bank and chairman of Agricultural Bank of China, to oversee the country’s stock market in the wake of last summer's slump that saw Xiao blamed for mismanagement.

The Nikkei reversed early declines as the yen's retreat helped investors shrug off disappointing manufacturing data. The Nikkei was up 1.8 percent. Flash February manufacturing PMI reading slid to 50.2, down from 52.3 in January as new export orders contracted at the fastest pace in three years. Exporters Canon, Nissan Motor, Fanuc and Sharp gained. Fast Retailing and Aeon were up after industry data showed supermarket sales increased in January from a year ago. Mitsubishi UFJ Financial and Inpex however, retreated.

Both the S&P/ASX and All Ordinaries added 1.0 percent. Sentiment was helped by higher metal prices and upbeat corporate earnings from BlueScope Steel, Brambles and UGL. BHP Billiton and Rio Tinto both closed up. Arrium soared after signing a recapitalization deal. Health insurer NIB Holdings was up after the company's New Zealand unit nearly tripled its first-half operating profit. The Kospi was virtually unchanged. The Sensex was up 0.3 percent.

Global Stock Markets

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.

Looking forward*

Germany posts its second estimate of fourth quarter GDP and February Ifo survey. In the US, January existing home sales, December S&P Case Shiller house price index and February consumer confidence will be reported.

*Note — all releases are listed in local time.