A short-term reversal of the decline in oil prices that began on Monday and continued through Tuesday has relived the pressure on stock markets.
Shares in Europe are seeing a rebound from multi-month lows. The FTSE 100 is still below 6000 but is close to 100 points off Monday’s low. The German DAX has pushed back above 10,300 but remains down on the week.
There is significant market risk going into the Federal Reserve meeting on Wednesday but further stock market declines before the decision is actually known don’t really make sense. The prospect of rising interest rates adds to tetchiness amongst investors but if the oil price stabilises that should mean shares can level off before the decision is known on Wednesday.
The oil and gas sector led gains on the FTSE 100. Royal Dutch Shell and BG Group shares were higher despite increasing concerns over viability of the merger at sub $40 per barrel oil prices. The feeling is that the majority of shareholders will vote for the deal to go ahead at the beginning of next year. However the idea of postponement or renegotiation could gain popularity if the price of oil goes much lower, bringing down the value of BG’s assets.
Mog the cat has helped make Sainsbury’s the cat’s whiskers of the supermarkets. Sainsbury’s was leading the supermarkets sector higher after the latest set of Kantar sales figures showed it was the only one of the top four to see growth in sales and market share over the past 12 weeks. The results for Tesco and Morrison were less favourable with falling sales and losing market share to German discounters Aldi and Lidl, who both saw double-digit sales growth. Tesco and Morrisons shares rose since their own results were not as bad as had been forecaster but also because Sainsbury’s has shown there could be light at the end of the discounting tunnel.
Most sectors were higher in the FTSE 100 amidst a broad-based recovery. Gold-miners Fresnillo and Randgold were top fallers after the price of gold fell over $13 per oz on Monday.
US markets look set for a higher open. Monday’s oil price rebound coincided with the Dow Jones Industrial Average narrowly avoiding a two-month low and a double top price pattern that could have triggered further declines towards 16,000.
USA pre-opening levels
S&P 500: 10 points higher at 2,031
Dow Jones: 88 points higher at 17,456
Nasdaq 100: 23 points higher at 4,593
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