Energy boosts European equities
On Thursday a surprise OPEC agreement boosted confidence for earnings at energy companies, sparking a third day of gains in European equities.
Energy producers and miners rallied after a surge in oil as OPEC members agreed to cut production for the first time since 2008. Royal Dutch Shell plc jumped 5.1% and Total SA gained 4.7%, their biggest surges since February, while BP plc added 4.4%. Those helped the benchmark Stoxx Europe 600 Index advance 0.8% at 10.23am in London.
The rebound that took the Stoxx 600 Oil & Gas Index up as much as 31% since January failed to push higher in recent weeks as the commodity stalled. Yet analysts kept tempering their estimates for earnings declines, pushing the valuation of energy producers to 15 times estimated earnings, the lowest since January relative to the Stoxx 600.
Thursday’s gains pushed the Stoxx 600 up for a third day, after it slumped the most since July on Monday on growing concern about lenders, with Deutsche Bank AG falling to a record. Better-than-forecast economic data in the US on Tuesday and the OPEC agreement on Wednesday mean the gauge is now close to erasing its weekly loss and is on track for its first quarterly advance of the year.
Almost all western-European markets rose on Thursday, with France’s CAC 40 Index and Italy’s FTSE MIB Index up more than 1.3%. Commodity producers Technip SA, Saipem SpA and Tenaris SA led the advances. The UK’s FTSE 100 Index gained 1.1%, while Germany’s DAX Index added 0.9%.
The jump in oil hurt airlines. Deutsche Lufthansa AG, Air France-KLM Group and Ryanair Holdings plc fell more than 2%, dragging down a gauge of travel shares.
Asian stocks rose after an agreement by OPEC to cut production pushed up a regional gauge of energy shares by the most since March. The MSCI Asia Pacific Index gained 0.5% to 141.52 as of 4.08pm in Hong Kong, set for its best quarter since the first three months of 2012, while the measure of energy companies jumped 3.5% to the highest in more than a year.
This article was compiled by Valletta Fund Management Limited, a member of the BOV Group.Valletta Fund Management,TG Complex, Suite 2, Level 3, Brewery Str, Mriehel BKR 3000 Freephone: 80072344. E-mail: email@example.com. Website: www.vfm.com.mt. Valletta Fund Management Limited is licensed by the MFSA.