Europe midday: Markets inch higher as oil stocks provide a lift

4th Nov 2024 11:42

(Sharecast News) - European markets advanced on Monday, with energy stocks leading the way higher, though trading was rangebound ahead of the US election, which has the potential to cause some big swings in the coming days.

The Stoxx 600 was up 0.23% at 512.09, rising for the second straight day after dropping to its lowest since mid-August last Thursday. After a subdued start, indices were edging higher by lunchtime as gains in London, Paris, Milan and Madrid outweighed a flat performance in Frankfurt.

Oil and gas stocks were the best performers on the back of a 2.7% jump in the price of Brent crude to $75.10 a barrel on Iran concerns and a delay to OPEC production hikes.

"The Iranian pledge to hit hard after the recent Israel retaliation heightens concerns that we may yet see the conflict escalate despite hopes that we will see a line drawn under the matter. Meanwhile, the OPEC+ decision to hold off for another month on their plans to raise production helped shift the supply/demand dynamic for the time being, helping to lift prices in early trade," said Joshua Mahony, chief market analyst at IG.

Meanwhile, the US election race comes to a head on Tuesday, though polls are still yet to identify a clear favourite. Nevertheless, financial markets expect former president Donald Trump to beat vice president Kamala Harris, with the 'Trump trade' - a stronger dollar, weaker bonds and stronger crypto - having performed well in recent weeks.

"With one day left of this campaign, the dollar is falling, and the dollar index is at a two-week low. Thus, if Harris does win on Tuesday we could see a rapid unwinding of this trade, a sharp weakening of the dollar and intense volatility in the FX and bond market," said Kathleen Brooks, research director at XTB.

In economic data, the S&P Global-HCOB eurozone manufacturing PMI improved to 46.0 last month, up from 45.0 in September and the highest level reached in five months. Nevertheless, the index still remained firmly entrenched in negative territory, coming in below the neutral 50-point mark for the 28th straight month.

Meanwhile, investor sentiment in the eurozone improved for the second month running in November, with the Sentix Investor Confidence index rising to -12.8 from -13.8 in October though slightly behind the -12.5 expected by analysts. However, despite the improvement month-on-month, Sentix said that "no positive turnaround scenario can be derived" from the data.

Market movers

Burberry shares were 6% higher on the back of speculation that Italian luxury fashion group Moncler could launch a takeover offer for the British counterpart following a sharp decline in the share price this year. According to Reuters however, Moncler called the rumours "unsubstantiated".

Shell, BP, TotalEnergies and Repsol were putting in decent gains as the oil majors followed crude prices higher.

London and Dublin-listed Ryanair pushed into positive territory following a weaker start after the airline's first-half results, in which it cut full-year traffic forecasts and reporting a drop in profits after taking a hit from lower fares and Boeing delays.

Anglo American gained after the A$1.6bn (£0.8bn) sale of its 33.3% stake in the Jellinbah joint venture in Australia as part of its strategy to exit the steelmaking coal industry. The miner said the process to offload the rest of its steelmaking coal mines is "now at an advanced stage".