Oil gains, stocks tick up ahead of OPEC meet
Oil prices made strong gains on Wednesday morning in London, regaining some ground from the previous day’s losses ahead of a meeting of the Organization of the Petroleum Exporting Countries (OPEC).
The group is meeting at 1pm GMT to discuss the potential knock to fuel demand as the world assesses the potential damage the Omicron variant of COVID-19 could do.
Crude (CZ=F) futures prices were up 3.5% in early trade in London, but were still below $70 a barrel, trading at around $68.53. Futures contracts for Brent Crude (BZ=F) also gained around 3.8%.
The meeting comes ahead of another round of talks with OPEC and its allies on Thursday.
Reuters reported that some analysts expect the meeting on Thursday to result in a pause to plans to add 400,000 barrels per day of supply in January, in light of Omicron.
Meanwhile, over in Europe stocks were on the front foot following Asia’s broadly positive note. The FTSE 100 (^FTSE) gained 1.3% by late-morning. The DAX (^GDAXI) was up 1.4% and the CAC (^FCHI) was up 1.3%.
The gains come following Markit’s manufacturing PMIs, which hit ahead of expectations in several regions in Europe.
“We are in a period of several weeks where the market will be increasingly desperate to find out just how much more infectious Omicron might be and whether it will escape existing vaccines,” said AJ Bell investment director Russ Mould.
“A definitive answer will have to wait until mid-December at the earliest it seems, but in the interim stock markets could react violently to hints in either direction.”
On Tuesday, markets took a shock as Federal Reserve chair Jerome Powell said tapering of bond purchases by the central bank could wrap up sooner than expected. He also retired the word “transitory” in relation to inflation — moves which could pave the way for an earlier interest rate hike.
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US stock futures were on the up. The S&P 500 (ES=F) looked set for an open 1.1% in the green. Dow futures (YM=F) were also up 0.8% and Nasdaq futures (NQ=F) were buoyed 1.3% by late-morning in London.
“The market is essentially being held up by its generals – a handful of tech heavyweights,” said Marios Hadjikyriacos, senior investment analyst at XM. “There has been a clear rotation to quality lately, with unprofitable ‘growth’ companies and small caps getting blasted while titans like Apple continue to forge ahead, carrying entire indices on their shoulders.”
Overnight in Asia stocks were on the upside. The Hang Seng (^HSI) rose 0.8% and the SSE Composite (000001.SS) closed the session 0.4% higher. Japan’s Nikkei (^N225) also rose 0.4%
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