Markets gain ground despite resurgent energy fears

Rising energy prices have done little to stifle market optimism today, with improving US banks earnings and jobless claims helping sentiment.

• Markets on the rise despite increased energy prices.

• US banks rally, as Bank of America and Morgan Stanley earnings impress.

• Jobless claims continue to fall.

Markets throughout Europe and the US have enjoyed a welcome day of positivity, with the FTSE 100 moving within touching distance of 19-month highs. Fears around energy prices and inflation appear to have eased for now, although today’s 5% rise in natural gas prices raise the risk that this respite may be brief in nature. The collapse of another three UK energy providers this week highlight the fact that prices are going to rise sharply for providers to stay in business. The business secretary has stated that forecasts of a mild winter could avoid the kind of squeeze seen in China. However, the risk of factory closures and a jump in the cost of living remain a distinct possibility if temperatures drop and usage heads upwards. Seven-year highs for unleaded petrol prices highlight ongoing inflationary pressures for consumers, with the continued rise in costs also likely hamper business margins.

US banking stocks are on the rise today, with third quarter earnings from Morgan Stanley and Bank of America on the rise after topping estimates. While margins have been hit thanks to lower interest rates, lower-than-expected losses and improved M&A income has helped drive improved earnings in the third quarter. Today’s jobless claims release helped highlight the upward trajectory of the US economy, with the first sub 300k initial claims figure since March 2020. Meanwhile, the decline in continuing claims brought about the lowest reading since the height of the crisis. Ultimately today’s jobless claims data helps allay fears that may have arisen off the back of Friday’s disappointing NFP figure.