— This is the script of CNBC's news report for China's CCTV on April 13, Friday.
U.S. stock traded higher overnight, with Dow Jones Average gaining 1.21%, S&P 500 Index gaining 0.83% and Nasdaq Composite Index rising 1.01%.The reason for such an increase is due to easing fire od trade war tensions between the US and China, as well as the Middle East geopolitical risks. Banking stocks got some rebounding during the overnight trading after falling on Wednesday.
One on hand, the risk aversion od investors got cooled down in the market, on the other hand, Blackrock is the first bank giant to release earnings in this round, shows a 26.8% increase in profit in the first quarter of this year. This encouraged the sentiment for bank industry. The stock price of JPMorgan Chase increased 2.49%, Citigroup rose 3.12% and Goldman Sachs advanced 2.68%.
Meanwhile, gold prices fell around 25USD from the high level in the last trading day due to risk appetite rose. As geopolitical tensions in the Middle East were helped to Trump's last tweets, oil prices should have experienced a correction. In the overnight trading, however, even with a stronger greenback, oil prices were hovering around 3year highs.
Among them, the WTI futures of West Texas crude oil rose 25 cents, closing at 67.07 USD per barrel overnight, hitting a new high since December 3, 2014; while Brent Crude closed at 72.02 USD per barrel. There are 3 reasons that can support the oil prices stay at current high level.
First, it's the situation in Syria. Although Trump softens the wording which made the market believes the missile strike might not be imminent. But the Syria's situations, as well as Trump's future plan are unpredictable. Thus, the geopolitical risk is still there, and the risk mood may come back to market according to the development of the situation. The latest data shows OPEC's strict implementation with the agreement on trimming supply make the supply and demand fundamentals improved and oil prices increased.
The latest monthly report that was published by OPEC last night in Beijing time shows the member nations of OPEC have reduced the production to 31.69 million barrels per day in March, declined by 201 thousand barrels per day compared to Feb's, making it the lowest production level of OPEX in one year. And this data indicates that OPEC compliance with oil output cut deal in March reached as high as 159 percent of the record. Hitting another record highThe cooling of US-China trading friction is the 3rd reason for the increased oil prices.
The logic behind this is simple. Trading conflicts may cause trade to decrease and reduce transport energy demand; On the contrary, if the global economy continues to expand and trade increases, this will drive the growth of crude oil demand. We will keep an eye on this issue.