Brent oil recovered from a 21-year low, bucking two days of frenzied selling, while WTI closed 19% higher. The market shrugged off a bearish EIA report showing US crude inventories rose a higher-than-expected 15.02 million barrels, which highlights the severity of the storage problem.

US stocks rallied as oil prices recovered from their record lows earlier this week. The positive sentiment sent Treasury prices lower, but the Dollar and gold shook that off and settled higher.

The S&P 500 closed at 2,799.31, up 2.3% while the Nasdaq Composite closed at 8,495.38 (+2.8%). The Dow Jones closed at 23,475.82, up 1.99%. The gains were broad, with all 11 sectors of the S&P 500 rising, led by the technology group, and 26 of the 30 members of the Dow Jones Industrial Average in the green.

Tonight, investors will digest the Labour Department’s latest report on jobless claims. Another 4.3 million workers are expected to have filed for benefits last week, which would bring the total number seeking benefits to over 26 million.

The number of cumulative claims rose to 22.025 million over four weeks prior, erasing nearly all of the 22.442 million jobs recovered since the Great Recession.

Europe’s markets closed higher too. UK inflation fell in March, on the back of tumbling oil prices and an escalation of the coronavirus crisis. The consumer price index came in at 1.5%, compared to 1.7% in February.

On the data front, South Korea’s GDP contracted 1.4% q/q in 1Q, almost as steep a drop as economists had forecast. Looking ahead, early indications for 2Q are already suggesting there’s worse to come. Shipments abroad for the first 20 days of April slumped while shipments to China and semiconductor sales also tanked as more major trading partners went on lockdown. That’s bad news for the export-oriented economy even as the virus outbreak looks to be easing domestically.

Source: OCBC Research - 23 Apr 2020