Battered oil wins respite, lifts stocks
LONDON – World stock markets eked out small gains on Tuesday, lifted by a recovery in oil prices from 11-year lows as investors unwound some of their bearish bets on the battered commodity.
European stock markets followed Asia higher. The pan-European FTSEurofirst 300 gained 0.4 percent after two days of falls while U.S. stock futures suggested Wall Street shares may build on Monday’s rally.
Oil stocks such as BP and Royal Dutch Shell rallied 2 percent as oil prices showed signs of stabilizing after a fall on Monday to new lows.
“The oil price is still the big driver of market sentiment at the moment for stock markets, but I’m not sure if it will hold above those lows, given the concerns about a glut of supply,” said Hantec Markets’ analyst Richard Perry.
The dollar was steady against the euro and yen. Traders were looking ahead to U.S. economic data for fresh direction although the approaching holiday season kept ranges tight.
Brent crude prices looked set to make the first daily gains in five, keeping oil at the top of investors’ watch list.
Brent futures traded up 17 cents at $36.52 a barrel, recovering from an 11-year low of $36.04 hit on Monday. U.S. West Texas Intermediate (WTI) crude futures were 32 cents higher at $36.13 a barrel, up from 2009 lows of $33.98 hit in the previous session.
After a roughly 35 percent decline this year amid a supply glut, sentiment toward battered oil remained frail.
“The path of least resistance for oil is still toward the downside and during the first half of next year we could form the bottom,” said Naeem Aslam, chief market analyst at AvaTrade. “Until then, the target of $28 for WTI crude is very real.”
SPAIN RECOVERS, DOLLAR STEADY
European stock markets were broadly higher. Spain’s IBEX bounced off Monday’s almost three-month lows on fears of political instability after the most inconclusive election in the country’s history.
“The Spanish election hasn’t helped in terms of market sentiment in Europe but it is going to be pretty quiet between now and Jan. 4, with a bit of noise from oil,” said Chris Scicluna, head of economic research at Daiwa Capital Markets in London.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, after Wall Street logged solid gains overnight.
China’s CSI300 index was slightly higher, erasing earlier losses, while Japan’s Nikkei stock index ended down 0.2 percent, though above session lows.
The dollar index, which tracks the currency against a basket of six others, was flat at 98.33.
Traders were looking to U.S. data, including revised third-quarter GDP and housing price indicators, later in the session but with many markets closed later this week, activity was expected to be thin.
U.S. and most European markets will close on Friday for Christmas, while in Japan, markets will be closed on Wednesday for the emperor’s birthday.
Euro zone bond yields crept up as the European Central Bank put a temporary halt to its asset purchases program over the Christmas break.
The pause in the 1.5 trillion euro scheme until Jan. 4 removes a pillar of support for markets at a time when inconclusive Spanish elections have created some price ructions.
Spot gold was little changed at $1,077.30 an ounce after rising 2.5 percent in the past two sessions. –Reuters