Energy shares have had their best start to a year since 2013, helped by improved sentiment on oil prices.
The S&P 500 energy sector index is down 0.7 per cent so far this year, compared with an 8.8 per cent drop in the same period a year ago.
It notched its narrowest loss in the first 10 trading days of a year since 2013 when the index was up 3.7 per cent.
Kinder Morgan shares were the biggest gainers on the energy sector, climbing 8.9 per cent year-to-date to $22.55, while Transocean shares are up 5.8 per cent to $15.59 over the same period.
The narrower loss in energy shares comes as West Texas Intermediate, the US oil benchmark, has posted a 1.9 per cent decline so far this year, compared with a 20.6 per cent drop over the same period a year ago. US crude also had its best start to a year since 2013.
Oil had rallied after Saudi Arabia-led Opec and non-members, including Russia, agreed last year to cut crude output by 1.6m barrels per day in 2017.
A glut of supply has seen oil prices remain 50 per cent below levels seen in mid-2014, when the downturn in oil first began. But that rally had cooled in recent weeks on concerns about how compliant oil-producing nations would be.
The move in energy shares also comes before energy companies begin to publish fourth-quarter results. The S&P 500 energy sector is expected to report an earnings decline of 7.9 per cent from a year ago — it’s smallest decline since the third quarter of 2014, according to FactSet.
The sector has also reported double-digit year-on-year earnings declines in each of the last eight quarters. Moreover, the energy sector is expected to report revenue growth of 2.7 per cent.
Still, after having clocked the biggest gains on the S&P 500 in 2016, the energy sector has lagged behind the benchmark index this year, which is up 1.3 per cent year-to-date.
But the S&P 500’s gains have been losing steam in recent days as the Trump rally has begun showing signs of fatigue. At the close in New York, the S&P 500, which, along with broader US markets was closed on Monday in observance of Martin Luther King Jr day, declined 0.3 per cent to 2,267.9 on Tuesday.
The Dow Jones Industrial Average also slid 0.3 per cent to 19,826.8, while the Nasdaq Composite gave up 0.6 per cent to 5,538.7.
Elsewhere, Mattel shares climbed 4.7 per cent to $30.91 after the toymaker behind Barbie and Hot Wheels replaced its chief executive.
The company has tapped Margaret Georgiadis — president of Google’s Americas operations — to take over from interim chief executive Christopher Sinclair on February 8. Mr Sinclair stepped in to lead the company after Bryan Stockton’s abrupt resignation in 2015.
Meanwhile, Revlon shares jumped 7.5 per cent to $34.55 after the cosmetics and skincare company said it would restructure its operations to focus on its four major brand teams: Revlon, Elizabeth Arden, fragrances and Portfolio Brands.
mamta.badkar@ft.com
Twitter: @mamtabadkar
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