Europe midday: Oil stocks drive markets higher as crude jumps

1st Nov 2024 10:55

(Sharecast News) - Europe's equity markets rebounded strongly on Friday following three straight days in the red, with oil stocks tracking the price of crude higher amid ongoing conflict in the Middle East.

The Stoxx 600 was up 0.9% at 509.78 after hitting its lowest level since 14 August on Thursday following a barrage of underwhelming blue chip earnings from across the continent.

Oil prices were creeping back up towards the $75-a-barrel level after last week's plunge, on the back of speculation that Iran is considering a retaliatory strike on Israel from Iraqi territory in the coming days. Brent crude was up nearly 2% at $74.17 a barrel in morning trade.

"Traders are bracing for another escalation of conflict given that Israel has already vowed to hit Iran hard if its military launches fresh attacks," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"Reports that the cartel, OPEC+ might put off a planned increase in output when it meets in early December have also given support to prices, amid expectations there might be a bit less crude washing around the market."

All eyes on economic data

Economic data was the theme of the day on Friday, with manufacturing surveys on tap in China, the UK and US.

The Caixin China manufacturing PMI rose to 50.3 last month from 49.3 in September, beating the 49.7 consensus forecast, as new orders increased at their fastest pace in four months and optimism among manufacturers rose to a five-month high. On Thursday, the government's 'official' manufacturing PMI pushed above the neutral 50-point level for the first time in six months, after a barrage of stimulus measures announced by the government in September started to take effect.

However, S&P Global UK manufacturing PMI fell to 49.9 from 51.5 in September. This was below the flash estimate of 50.3 and marked the first time the PMI has fallen below 50 since April.

Over in the US, the ISM manufacturing PMI is also due, though the market's attention will be firmly fixed on the release of the US non-farm payrolls report, which is forecast to show that job creation slowed to 113,000 in October after September's bumper reading of 254,000.

However, the market reaction will be difficult to predict, according to Kathleen Brooks, research director at XTB. "The market is expecting a sharp slowdown in payrolls growth in October. [...] However, hurricanes and the Boeing strike are likely to sway these numbers, so traders may look through them. They also might not meaningfully impact next week's Fed decision," Brooks said.

Market movers

Energy majors BP, Shell, TotalEnergies and Repsol were all benefitting from a higher oil price, while well-received results from US counterparts Exxon Mobil and Chevron were also providing a boost. BP in particular was rebounding after dropping to a two-year low earlier in the week.

Reckitt Benckiser was up 9% after its subsidiary Mead Johnson was cleared of liability in a US trial investigating whether the company - alongside Abbott - hid bowel disease risks associated with premature-baby formula. With many similar lawsuits still pending, investors are hoping that any potential settlement costs won't be as bad as initially feared.

German food delivery firm HelloFresh jumped 6% just one day after announcing plans to close a distribution site in the UK, putting 900 jobs at risk. The stock was pushed higher by positive comments from JPMorgan on Friday, which lifted its rating from 'neutral' to 'overweight'.

Also helped by broker commentary was UK asset manager Schroders which rose 4% after an upgrade to 'outperform' at BNP Paribas Exane.

Meanwhile, Danish shipping giant Maersk was up 5%, extending gains made the previous day after reporting a huge jump in third-quarter profits. The stock has now risen nearly 13% over the past two days.