Markets continue BOE/NFP gains, oil higher on freeze talk

​The rally kicked off by the Bank of England’s “sledgehammer” monetary policy decision on Thursday has followed through to the beginning of the new week.

The rally kicked off by the Bank of England’s “sledgehammer” monetary policy decision on Thursday has followed through to the beginning of the new week.

The FTSE 100 has broken above 6800 as data from Visa shows consumer spending picked up in July, clearly undaunted by the “risks” of Brexit.

Mining and financial company shares were leading gains following mixed trade data from China and a broker upgrade for Barclays. Hikma Pharmaceuticals was propping up the UK benchmark equity index as investors continue to bemoan the company’s warning over generic competition that plunged the shares by double digits last week.

Shares of Anglo American are near the highest in a year and BHP Billiton rose to fresh nine-month highs on Monday. Mining companies are being helped by a belief that government and central bank stimulus will support commodity demand.

Visa said in its report that UK consumer spending is “holding up” but at “lower levels of growth.” The latest PMI data was a clear sign that business confidence took a knock in the wake of the referendum, but the picture has been more mixed for consumers. Data from GfK showed a sharp decline in July but individual retailers have suggested there has no clear negative effect on results. It will be a good thing for investors, as well as businesses once some hard economic data for July comes in to give a truer picture of the British economy post-Brexit.

Oil prices have risen amid renewed talks of an output freeze, though gains were limited given the failure of previous attempts to reach agreement. The economic, political and religious rivalry between Saudi Arabia and Iran mean any hopes of an oil output freeze from Venezuela are likely to be dashed. Still, as Iran’s output nears historical levels, an agreement to freeze production will become more in its economic interest, and increase the chance it will put its other differences with Saudi Arabia aside. Iran’s output has expanded much quicker than most expected, making agreement amongst larger producers at November’s OPEC meeting a distinct possibility.

US stocks look set for a higher open, building on Friday’s post-non-farm payrolls gains ahead of earnings from the likes of Sotheby’s, Tyson Foods and Allergan.

USA pre-opening levels

S&P 500: 3 points higher at 2,185

Dow Jones: 15 points higher at 18,558

Nasdaq 100: 8 points higher at 4,799

 

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