In mid-morning trading, the FTSE 100 is 70 points higher, as oil and mining stocks lift the index, while Capita slumps to the bottom.
-
Raw materials sector surges
-
Capita’s warning sends investors running for cover
-
US session filled with data and Fed-speak
The overnight news from OPEC has revived risk appetite, with investors returning in droves and finding particular bargains in the oil sector.
BP and Shell between them comprise nearly half of the gains to the index in terms of points, as these stocks suddenly look a lot more attractive based on improved expectations for oil prices. Miners are pushing strongly higher as well, as the shift back to risk assets benefits these growth plays. The index would be even higher were it not for Capita, whose profit warning has wiped almost a third off the stock. Outsourcers have been left in the cold following the EU referendum, with Capita already significantly underperforming the FTSE 100 since the vote, even before today’s nose-dive.
OPEC’s surprise decision to cut output has given oil markets a remarkable fillip, with the hope that more will come at the November meeting undoubtedly playing a part. The news has seen Brent and WTI rally substantially, although from a there is still work to be done to get back to the highs of the year. Expectations of a bigger cut to output later on in the year, ideally with Saudi Arabia and Russia, the two biggest players, doing their bit, could see oil reverse its traditionally weak performance in the fourth quarter and push higher. It turns out that OPEC members can agree, and no doubt oil companies and their investors will be hoping that this outbreak of amity continues into the end
of 2016.
Markets are gearing up for a busy day of US data, with core PCE, GDP and home sales all on the ticket, with two more Fed speakers thrown in to add to the excitement. The OPEC news broke before US markets closed, so most of the reaction took place in the immediate aftermath, and so a quieter start is expected. Ahead of the open, we expect the Dow to start at 18,341, up 2 points from last night’s close.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Recommended Content
Editors’ Picks
EUR/USD stays near 1.0800 after upbeat US data
EUR/USD stays under modest bearish pressure and trades near 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.