Oil price slump weighs on global markets
Iseq up close to 0.3% on stronger banks as Cairn Homes rises on stromg demand for housing
Oil stocks slumped as crude prices dropped more than 5 per cent. Photograph: AFP via Getty
European stocks handed back most of their early gains to close slightly higher yesterday, as a slide in oil majors offset a slew of positive earnings reports.
London-listed shares rose on hopes of more US stimulus and signs that the British government would not impose another sweeping national lockdown, but the slide in oil stocks capped gains.
The Iseq index rose almost 0.3 per cent, helped by a strong performance from Irish banks. Bank of Ireland finished the session ahead by 4.4 per cent to €1.65, while AIB was up 3.9 per cent to 91 cents.
Cairn Homes rose by 4.4 per cent to 82.5 cents per share, as research from property website Myhome.ie suggested demand for housing remains strong.
Providence Resources continued to jump about, a day after the oil and gas explorer revealed it had narrowed its losses and is fully funded until next July. It closed down 6.4 per cent to just over 7 cents, after having been up earlier in the session.
The UK government said it was seeking to avoid a full national lockdown to contain a resurgence in Covid-19 cases, in the interest of preventing unemployment soaring into the millions. The more domestically focused mid-cap index rose 0.4 per cent, while the blue-chip FTSE 100 edged up 0.2 per cent.
Defensive plays such industrials, utilities and healthcare stocks were among the top boosts. Oil stocks slumped as crude prices dropped more than 5 per cent, with a rise in Opec output last month and rising coronavirus cases dampening the demand outlook. BP fell 3.1 per cent.
Rolls-Royce dropped 10.2 per cent after the aero-engine maker said it planned to raise £2 billion (€2.2 billion) from shareholders, £1 billion from the bond market and secure further loans to rebuild its balance sheet.
Retailer Halfords surged 31.5 per cent to its highest level since June 2019 after it raised its first-half profit outlook as it continued to benefit from a cycling boom during the pandemic.
The pan-European Stoxx 600 ended 0.2 per cent higher, fading on the oil price slump. Total and Royal Dutch Shell fell 2.4 per cent and 3.8 per cent, while the oil & gas index slid 1.7 per cent.
German stocks slipped 0.2 per cent, weighed down by a 13.1 per cent slump in Bayer after it flagged that adjusted profit may slip next year and it may have to write down the value of agriculture assets by close to €10 billion.
Swedish fashion retailer H&M surged 6.1 per cent as it beat third-quarter profit forecasts and announced plans to close hundreds of stores next year as the coronavirus crisis drives more shoppers online.
STMicroelectronics jumped 6.9 per cent after it forecast 2020 sales above previous estimates and said a sharp rise in automotive and microcontroller demand helped preliminary results.
Renewed US stimulus hopes lifted gold prices and global equity markets, but relief talks faltered while an all-day outage on Tokyo’s Nikkei provided a bumpy start to a likely volatile fourth quarter.
The dollar slipped against major currencies as hopes for a new round of fiscal stimulus from Washington buoyed investors who sought higher-yielding but riskier currencies. Stocks on Wall Street rose as investors bet on more stimulus after data showing the number of Americans filing new claims for jobless benefits fell last week. But claims were still at recession levels, while personal income dropped in August, underscoring the need for further government stimulus.
The Dow rose 35.2 points, or 0.13 per cent, to 27,816.9. The S&P 500 gained 17.8 points, or 0.53 per cent, to 3,380.8 and the Nasdaq Composite added 159.00 points, or 1.42 per cent, to 11,326.51. (Additional reporting – Reuters)