Global markets in holding pattern despite recovery in oil stocks

The oil price continued to surge in overnight trading, increasing from the previous day’s close of US$52.24 per barrel to close in the vicinity of its intraday high of US$53.15 per barrel, suggesting there could be further upside to come.

This represents a gain of approximately 6% over the last five days, and renewed interest in the commodity has provided momentum for producers such as Chevron Corporation and ExxonMobil, as well as equipment providers such as Caterpillar Inc.

However, there is still a sense of uncertainty with investors taking a cautionary approach towards equities markets amidst geopolitical tension, and the prospect that the upcoming earnings results in the US will fail to support the bullish market trends that have underpinned large increases in global indices in the last three months.

The Dow finished flat at 20,658 points, while the NASDAQ added three points to finish at 5880 points.

It was a similar story in the UK with the FTSE 100 unmoved at 7349 points. Support for energy stocks and some positive momentum in the financial sector failed to offset soft to negative sentiment.

This mood also prevailed in mainland Europe with the DAX falling 0.2% to close at 12,200 points.

The Paris CAC 40 shed 0.5% to close at 5107 points after threatening to test the 5150 point level for the first time since 2015. However, the index which tends to fly under the radar has performed strongly having surged circa 1100 points since June 2016, representing a gain of approximately 28%.

Gold continues to trade in a tight range between US$1250 per ounce and US$1260 per ounce.

Iron ore gave up more ground overnight, dropping to US$74.71 per tonne.

Nickel and lead were the only base metals to gain ground, but their gains were only nominal. Copper and zinc are hovering in the vicinity of one month lows.

Copper fell 1% to US$2.60 per pound, the bottom end of a tight range it has traded in since the start of the year.

Zinc has been the big disappointment in March/April, falling from a high of US$1.30 per pound to US$1.18 per pound, having given up all of the ground made between January and February when it peaked at circa US$1.33 per pound.

The Australian dollar is fetching US$0.75.

This article is General Information and contains only some information about some elements of one or more financial products. It may contain; (1) broker projections and price targets that are only estimates and may not be met, (2) historical data in terms of earnings performance and/or share trading patterns that should not be used as the basis for an investment as they may or may not be replicated. Those considering engaging with any financial product mentioned in this article should always seek independent financial advice from a licensed financial advisor before making any financial decisions.