World equities recover with commodities

Oil futures rose on world markets overnight after last week's big sell off. Photo / Thinkstock

Stocks on Wall Street recovered overnight as a rebound in prices of raw materials bolstered commodity producers.

In afternoon trading on Wall Street, the Dow Jones Industrial Average gained 0.50 per cent, the Standard & Poor's 500 Index rose 0.54 per cent and the Nasdaq Composite Index climbed 0.63 per cent.

The energy and materials sectors were the best performers on the S&P 500 as Brent crude oil futures advanced after last week's drop lured back investors. Goldman Sachs says the pullback has made commodities attractive again.

In London, ICE Brent for June delivery traded 4.8 per cent higher at US$114.39 a barrel by 1.49pm EDT.

US oil companies' profits have grown so fast that they've become the cheapest equities in the S&P 500 Index, according to Bloomberg News.

"Multiples on energy stocks are very low and the investment opportunity remains pretty good," Brian Barish, who oversees US$8 billion, including Chevron shares, as president of Denver-based Cambiar Investors LLC, told Bloomberg.

Across the Atlantic, however, the benchmark Stoxx Europe 600 Index slid 0.3 per cent, extending last week's 0.9 per cent drop, after Standard & Poor's further slashed Greece's credit rating.

The credit ratings agency's move to cut Greece's debt rating to B showed increasing doubt the euro zone's most fragile economy can manage its debt without imposing losses on private bondholders.

"In our view, there is increased risk that Greece will take steps to restructure the terms of its commercial debt, including its previously-issued government bonds," the agency said in a statement, warning that more downgrades could come.

Moody's said it might lower its Greek rating by more than one notch while Fitch analyst Chris Pryce told Reuters the agency was "actively reviewing" Greece's rating. The EU is reportedly considering lowering the interest rate terms of the bail-out accords for both Greece and Ireland.

"Europe continues to be a regular cloud on the market," dimming the market's bullish mood, Christian Magoon, chief executive of Magoon Capital in Lisle, Illinois, told Reuters.

The yield on Greek two-year government bonds soared 25 basis points to 25.58 per cent today.

The euro slid as low as US$1.4254 on trading platform EBS, before later recovering to US$1.4333, up 0.2 per cent on the day.

In IPO news, LinkedIn Corp is gearing up for a public debut valuing the company at more than US$3 billion.

LinkedIn, which attracts professionals and job seekers with 100 million worldwide members, said on Monday it would offer 7.84 million shares priced between US$32 and US$35 apiece.

On the merger and acquisition front, Hertz Global Holdings boosted its offer for Dollar Thrifty Automotive Group to nearly US$2.1 billion - almost double what it offered in April last year - as it attempts to create the second-largest US rental car company.