Oil price hits US$70 for first time in three years

Financial analyst Paul Horsnell says "pretty much all of the fundamental boxes" have been ticked to support the current rally. Photo/File.

Oil rose above US$70 (NZ$97) a barrel in London for the first time in three years.

"Pretty much all of the fundamental boxes are supportive of the current rally and a bit more," Paul Horsnell, head of commodities research at Standard Chartered in London, told Bloomberg.

Wall Street also climbed. In 1.17pm trading in New York, the Dow Jones Industrial Average gained 0.6 percent, while the Nasdaq Composite Index climbed 0.7 percent. In 1.03pm trading, the Standard & Poor's 500 Index added 0.6 percent.

The three benchmark indexes all touched record highs.

"Most of the dynamics that were in place late last year remain in place," Burns McKinney, chief investment officer for Allianz Global Investors based in Dallas, told Bloomberg.

"What's been driving the markets is that equities and investors have continued to price in the potential gains from tax reform... There's still room for earnings forecasts to move upward."

In the latest US inflation data, a Labour Department showed its producer price index for final demand fell 0.1 percent in December, the first decline since August 2016.

"Factories aren't producing as much inflation, which is sure to bedevil the doves at the Fed[eral Reserve] who are worried about too low inflation," Chris Rupkey, chief economist at MUFG in New York, told Reuters. "Today's data strike at the heart of the argument over whether Fed officials should let the economy run hot for a while longer with a shallower path of rate hikes."

The Dow rose as gains in shares of Chevron and those of Intel, recently up 3.2 percent and 2.2 percent respectively, outweighed declines in shares of American Express and those of Procter & Gamble, down 0.9 percent and 0.4 percent recently respectively.

In Europe, the Stoxx 600 Index ended the day with a 0.3 percent decline from the previous close. Germany's DAX Index retreated 0.6 percent, while France's CAC40 Index fell 0.3 percent.

However, the UK's FTSE 100 index rose 0.2 percent, led by gains in shares of Just Eat and EasyJet.

Meanwhile, shares of Marks & Spencer and Tesco posted the largest slide in the FTSE 100 index.

Shares of Tesco closed 4.5 percent weaker after Britain's largest supermarket chain reported disappointing sales for the holiday season.

The "ongoing drag from general merchandise and lost tobacco sales due to Palmer & Harvey integration" weighed on sales growth, Tesco said in a statement.

Same-store sales in the 19 weeks ended January fell short of analysts' expectations, as did like-for-like revenue over the six weeks ended January 6.

"We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years," Dave Lewis, chief executive, said in the statement. "Our trading momentum accelerated across the third quarter and into December, with the four weeks leading up to Christmas Day delivering record sales and volumes in the UK.

"Incorporating Palmer & Harvey volumes and complexity during this peak period was challenging, resulting in lost tobacco sales in December and putting further strain on our distribution network, particularly post-Christmas," Lewis noted. "While I am pleased to say these challenges have now been resolved, they took the shine off an otherwise outstanding performance for the period as a whole."