-European markets surge: The Stoxx Europe 600 index climbed 2.4 percent by 10.45 a.m. London time, with the gains led by euro area banks which saw a rally of over 6 percent in the Euro Stoxx Banks (price) Index of over 6 percent. Italy’s FTSE-MIB gained 4.1 percent, while Germany’s Dax was 2.7 percent higher. The gains come as traders reassess the policies announced by Mario Draghi at yesterday’s ECB meeting. Euro bond markets are also rallying, with spreads between Italian and German 10-year securities tightening. This morning Italy sold three-year bonds with a negative yield for the first time.
-Global rally: The gains are not limited to European stocks, with the MSCI Asia Pacific Index adding 0.7 percent overnight while S&P 500 futures were 1.1 percent higher at 11:15 a.m. London time. U.S. Treasuries are not taking part in the fun, however, as demand for their relative safety eases amid the rally. Investors are also keeping an eye on next week’s Federal Reserve meeting. Gold is also lower.
-IEA says oil may have bottomed: Oil prices may have passed their lowest point as high-cost production shuts down and Iran production returns to the market more slowly than previously estimated, the International Energy Agency said this morning. Goldman Sachs Group Inc. are also turning slightly more bullish on the commodity, putting their price target for a barrel of oil between $25 and $45 for the second quarter of 2016. Oil futures climbed 2.7 percent to $38.85 a barrel on the New York Mercantile Exchange at 11:20 a.m. London time.
-Yuan erases 2016 loss: China’s currency advanced to its strongest level since December after the country’s central bank raised its daily reference rate by the most in four months. The move comes as the People’s Bank of China finishes mopping up the extra liquidity it had injected into the banking system over the Lunar New Year Holidays. In a sign that the country is seeking to address its bad-debt problem, the central bank, along with the country’s top economic planning agency, are drafting rules that will make it easier for lenders to convert bank loans into equity stakes in debtor companies.
-Brazilian crisis: The political crisis in Brazil caused by the vast corruption probe known as Operation Carwash is moving closer to the country’s president. Dilma Rousseff’s government risks losing an ally in parliament this weekend as the Brazilian Democratic Movement Party seems set to declare its independence from the government at its national convention tomorrow, meaning its members could vote as they please on bills and, importantly, impeachment proceedings. Brazilian stocks are at their highest level since August as pressure increase on Rousseff.
-Markets are bouncing: U.S. stock futures are jumping ahead of the open. And European markets are surging in early trading, gaining between 1% and 2%. Asian markets closed the week on a positive note. Dramatic policy actions on Thursday from the European Central Bank — and comments from ECB President Mario Draghi — still seem to be reverberating through the markets. The central bank cut interest rates, expanded its bond buying program and said it would pump more money into the economy as it tries to head off deflation in the eurozone. Market reaction was initially positive on Thursday, but then soured rapidly after Draghi appeared to suggest rates would not go any lower. «Traders appeared to take that to mean the ECB is out of ammunition,» noted Ilya Spivak, a currency strategist at DailyFx. «With that in mind [Friday’s rally] may reflect traders’ re-evaluation of the ECB president’s remarks.»
-Eyes on oil: Crude oil futures are rising by about 2% to trade around $38.50 per barrel. Prices have been rising steadily since they hit a low in February around $26 per barrel. The International Energy Agency published a monthly report Friday that predicted the worst of the oil price crash may now be over. Non-OPEC production may be falling faster than the agency predicted a month ago, and Iran’s return to world markets has been more gradual than expected. «There are signs that prices might have bottomed out,» it said in the report.
– Thursday market recap: It was a bumpy trading day Thursday as investors reacted to the ECB news. But by the end of the day, markets hadn’t changed much. The Dow Jones industrial average lost just 5 points on the day while the S&P 500 stayed flat. The Nasdaq shed 0.3%.
-Desperate oil companies sell stock to raise cash: U.S. oil and gas companies are trying to survive the crash in oil prices by selling stock to investors at a record-setting pace to raise cash. With oil prices stuck below $40 a barrel, companies are racing to quiet bankruptcy fears. And to do that they have to raise cash — fast. The preferred method usually is to sell bonds. But that’s not an option for many companies that are already loaded up on too much debt taken on during the good times. That’s why the latest trend in the oil patch is to raise money by selling extra stock. U.S. oil and gas companies have already sold $10.5 billion in new shares so far in 2016, according to Dealogic. Last week Marathon Oil (MRO) joined the parade of stock offerings, raising $1.3 billion. The stock sale came just weeks after the company reported its first annual loss in 20 years. Marathon has sought to stem the bleeding by cutting its capital spending in half for 2016. At least 16 other American oil and gas companies have done the same thing this year, including Hess (HES), Devon Energy (DVN) and Weatherford International (WFT). This week Gulfport Energy (GPOR) announced plans to raise $358 million by selling 14.7 million shares