Rise in oil price above $50 helps to drive up markets
OIL’S rise back above $50 a barrel helped prod stock markets higher yesterday, while company results and economic data continued to soothe worries that the world economy may be ripe for a another slowdown.
European stock markets rose around half a percent by lunchtime, led by energy and commodity-linked firms after Brent crude topped the $ 50 mark for the first time since early June and copper added another 1pc to this week’s surge.
A slightly less bullish performance in Asia pulled the MSCI world equity index which tracks shares in 46 countries, off all-time highs overnight.
But early in the European session, it was up 0.1pc on the day, and US stocks futures showed Wall Street should edge higher on opening, which it did.
Strong results from energy firms Subsea 7 and Tullow Oil helped European shares, but banks weighed on index-level gains as investors awaited the outcome later yesterday of the Federal Reserve’s twoday policy meeting. Shares in Tullow Oil jumped over 7pc at one stage.
“The indications are more positive on the outlook for energy stocks,” said Angelo Meda, head of equities at Banor SIM in Milan, adding that firms had reset expectations on valuations and cleaned up their balance sheets.
“The outlook is not so bad. We are still missing one component which is the commentary from big oil firms Total, BP, Royal Dutch Shell.”
The pan-European STOXX 600 gained 0.4pc midway through the session, in line with Eurozone stocks and blue- chips, as oil and gas gained 0.7pc.
Germany’s Ifo business survey on Tuesday showed confidence soaring to record highs in July amid what its economists described as a ‘euphoric’ mood in German industry, while US consumer confidence levels jumped to near 16-year highs.
The latter numbers helped the dollar recover some ground in US and Asian trading yesterday.
In Ireland, the ISEQ Overall Index had jumped 2.9pc to 6,893.47 by midafternoon.
Shares in Permanent TSB plunged 15pc as it released interim results and said that the number of non-performing loans on its books remains “unsustainably high”.
Shares in Bank of Ireland were slightly higher, while AIB was up almost 0.9pc.
Other gainers included embattled Swiss-Irish food group Aryzta, with its shares trading 2.1pc higher in Dublin at €27.70.
The UK’s FTSE-100 was 0.35pc higher. Germany’s DAX was up 0.4pc and France’s CAC- 40 was 0.6pc higher.