Dec 22, 2014 8:29 AM
Stocks advance amid oil price stability hopes
The Associated Press
LONDON (AP) Global stock markets rose strongly Monday amid hopes that some stability was emerging in oil markets following a rout that's seen prices slide to five year lows.
KEEPING SCORE: In Europe, Britain's FTSE 100 rose 1 percent to 6,608 while Germany's DAX rose 1.3 percent to 9,909. France's CAC 40 advanced 0.8 percent to 4,274. Wall Street looked set to make further gains at the open, with Dow futures up 0.3 percent and the broader S&P 500 futures 0.2 percent higher.
SAUDI PRICE DENIAL: Saudi Arabia Petroleum Minister Ali Naimi said Sunday he was certain oil prices would recover with the improvement of the global economy. In a speech at an energy summit in Abu Dhabi, Naimi denied his government was trying to suppress oil prices many in the markets think Saudi Arabia isn't too unhappy with the fall in oil prices as it could drive many producers to the wall, strengthening the oil-rich kingdom in the long-run. Oil peaked at $107 a barrel in June but has plunged since then due to weak demand, especially after Saudi Arabia and other OPEC members agreed to maintain production levels. In the wake of Naimi's comments, a barrel of Brent crude, the international standard, rose $1.14 a barrel to $61.16. However, benchmark New York crude was 28 cents lower at $56.85 a barrel.
ANALYST TAKE: "After spending the last six weeks as the Scrooge of the economic world, oil has undergone a slight rejuvenation," said Connor Campbell, financial analyst at Spreadex. "In this current climate, any price above $60 per barrel for Brent crude oil is a signifier of hope for the markets."
SANTA RALLY: Steadier oil prices have helped stock markets continue their pre-Christmas advance often referred to as a Santa rally. The main catalyst to the rally was last week's reassurance from the U.S. Federal Reserve that it was in "no hurry" to hike interest rates and that a rate hike will not take place during the first quarter of next year. The news emboldened investors and the U.S. dollar has been solid against other major currencies. On Monday, it gave up some gains against the euro but remained firm against the yen. The euro was up 0.3 percent at $1.2260 while the dollar rose 0.4 percent to 119.96 yen.
ASIA'S DAY: China's Shanghai Composite Index was up 1.6 percent to 3,158.94. South Korea's Kospi added 0.7 percent to 1,943.77 and Hong Kong's Hang Seng rose 1.5 percent to 23,452.25. Japan's Nikkei 225 dipped 0.1 percent to 17,610.33 while Australia's S&P/ASX 200 spiked 1.9 percent to 5,422.00.