Oil Futures rise as U.S. stock gets a boost

May 11, 2011, 08:58 by R.E. Christian

U.S. stock futures were poised to extend a three-day rally Wednesday that began with last Friday's jobs report.

The Labor Department said Friday that non-farm payrolls added 244,000 jobs in April with the private sector gaining 268,000 positions.

The largest monthly gain in five years was given further credibility as the department revised higher job gains for both February and March. In spite of the gains, with 13.7 million listed as unemployed, the unemployment rate ticked higher to 9 percent.

On Monday, stocks were given a boost by a check in commodities markets with oil rising after a sharp tumble. Oil started the month at $113.50 per barrel. On Monday, June delivery crude oil on the New York Mercantile Exchange added $1.33 to claw its way back above $103.

News from China is likely to add to the momentum Wednesday.

U.S. Treasury Department officials said an agreement reached in Washington Tuesday would provide a "framework of comprehensive economic cooperation," between China and the United States, part of that revolving around more open policies for financial firms, such as auto insurance companies and firms that underwrite corporate bonds.

China said this week it was having a hard time controlling inflation, as consumer prices rose 5.3 percent in April compared to a year earlier, The New York Times reported.

Inflation persists in China despite the central bank in Beijing tightening lending restrictions four times since October.

With economic growth also sizzling, "Our domestic market is doing very well and continues to expand," said He Lei, the vice general manager of the Zhejiang Qingsen Textile Garments Company told the Times.

"Our year-on-year growth in this sector has been 30 percent," he said.

With 13.7 million out of work in the United States, it might be said the U.S. middle class is in shambles. But, it also might be said that if all roads lead to China, then all roads in China lead to the vast market potential of China's growing middle class. The Wall Street Journal Tuesday said even remote villages in China have become General Motors Corp.'s "new sales frontier."

Villagers in western China want cheap, rugged cars without the built-in DVD player for the kids in the back seat, which presents a profit-challenge for GM and others. How do you make a profit on a car, when the buyer turns down the GPS system and the surround sound stereo system?

Obviously, the profit margins are not as wide, but GM, nevertheless, expects to sell 5 million cars in China by 2015, the Journal said -- more than twice the sales volume achieved in 2010.

In international markets Wednesday, the Nikkei 225 index in Japan rose 0.25 percent while the Shanghai composite index in China lost 0.63 percent. The Hang Seng index in Hong Kong was closed while the Sensex in India shed 0.09 percent.

The S&P/ASX 200 index in Australia lost 0.65 percent.

In midday trading in Europe, the FTSE 100 index in Britain rose 1.28 percent while the DAX 30 in Germany gained 1.23 percent. The CAC 40 in France rose 1.13 percent while the Stoxx Europe 600 index added 0.89 percent.

Source: UPI