European markets have continued their recent run of good fortune, rising for a third day. Markets shed some of the early gains when Russian and Saudi Arabian oil ministers at a meeting in Doha failed to reach an agreement to cut production in response to decade-low oil prices.

The meeting was reported to have finished by 9am, not exactly the longest meeting in history, with an agreement to freeze production at January levels rather than cut it back. Brent crude lost $1.50 per barrel from its highs of the day as the news broke. With the price having just touched its highest this month, oil market risks were always skewed to the downside.

The output freeze is disappointing because it’s not an outright cut and with Iran not a part of the meeting, it’s still a bit far-fetched to think this is a precursor to a future cut. Iran’s absence from the meeting means overall OPEC output should still rise.

Oil majors BP and Shell led the gains on the FTSE 100 amidst the rebound in oil, though came off the highs when Russian and OPEC oil ministers confirmed an output freeze.

Anglo American was amongst the biggest fallers on the UK benchmark after the miner reported double the previous year’s loss thanks to falling commodity prices. Not helping matters, rating agency Moody’s downgraded the company’s credit rating to junk. The plan for asset disposals makes Anglo a leaner meaner machine but will also limit future growth and was likely a last resort since shareholders had little appetite for injecting new capital.

The pound rose against the dollar following a surprise uptick in support for Britain staying in Europe according to a poll from ITV, but gave back some of the gains after data showed a slight softening in inflation. UK core CPI rose 1.2% y/y in January, down from 1.4% last month and 1.3% expected.

US markets look set for a stronger start with the Dow rising double digits in a catch-up from yesterday’s gains in Asia and Europe after yesterday’s Presidents Day holiday.

USA pre-opening levels

S&P 500: 20 points higher at 1,884

Dow Jones: 174 points higher at 16,147

Nasdaq 100: 54 points higher at 4,073

 

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