US open: Stocks on the back foot as oil and dollar slumps

US equity markets were on the back foot on Wednesday as oil prices weakened lowering energy stocks, while the dollar fell after previous gains.

The Dow Jones Industrial Average was down 0.26% to 20,037.21, the S&P 500 declined 0.17% to 2,289.29 and the Nasdaq slipped 0.12% to 5,667.67 at 1525 GMT

Oil prices retreated after the Energy Information Administration on Wednesday said crude inventories rose by 13.8 million barrels to 508.6 million. Analysts had estimated a build of 2.5 million barrels, a fifth consecutive weekly increase.

Figures late on Tuesday from the American Petroleum Institute showed a 14.2m barrel build in its crude oil inventory last week, compared to a 5.8m barrel rise the week before and expectations for a 2.5m build.

West Texas Intermediate was down 0.83% to $51.74 a barrel and Brent crude was off 0.58% to $54.73.

Oil giants ExxonMobil and Chevron were down 0.66% and 0.59% respectively, while small and mid-sized firms also fell with Murphy Oil down 1.11% and Marathon Oil 0.5% weaker.

Whereas, gold on Comex rose 0.61% to 1,243.70 per troy ounce.

Adrienne Murphy, chief market analyst at AVA Trade, said: “With crude oil inventories in the afternoon, oil traders have found inspiration and are turning bullish. The recent devaluation in the value of the commodity, derives from the apprehension investors have over OPEC’s ability to curtail production.

“The actual number of barrels held in inventory have surpassed expectations in recent months, causing investors to be dubious of forecasts. We expect that inventories will again surpass predictions, causing the price to tumble to around the $51 mark. However, if inventories match expectations, crude oil will enjoy a surge in price, soaring past the $55 mark in the short-term."

Meanwhile, the dollar was 0.48% weaker against the yen to 111.85, was down 0.06% against the pound to 0.7988 and shaved off 0.1% versus the euro to 0.9351.

Murphy said that the dollar had been one of the beneficiaries of the Donald Trump era, however the greenback has lost a lot of those gains recently.

“The level off shows how investor’s optimism is wearing. Investors are searching for meaningful bullish policy reform, while all they have seen it isolationist actions. All signs point to a bearish dollar in 2017. The increase in oil prices should add inflationary pressures to the US economy. Additionally, Trump’s promised ‘boarder taxes’ will decrease imports, making competing exports more expensive, which will edge up inflation further. On the other hand, there are some bullish factors to be aware of, once the Fed raises rates, I can see the dollar appreciating.”

On the corporate front, botox maker Allergan added 2.27% after it beat profit estimates and remained upbeat in its forecast for 2017.

Time Warner rose 0.33% as JK Rowling’s Fantastic Beasts speared the media giant to beat revenue and profit expectations, while Disney rose 1.33% after Star Wars: The Force Awakens helped the film studio top earnings estimates, from results posted on Tuesday.

Property website Zillow Group slumped 7.62% after saying late on Tuesday that it expects a wider loss for the year than the market had been expecting.

Restaurant chain Panera Bread gained 6.03% as it said it expects sales to continue to accelerate this year.

Microchip Technology surged 6.81% after its quarterly results topped forecasts and Alaska Air Group rose 2.22% after the company posed a quarterly double-digit surge in revenue.

Results are due from Whole Foods Market later in the day.