Market rally fizzles out as US oil stocks jump - as it happened
All the day's economic and financial news, as markets suffer another volatile day
- US weekly crude inventories rise by more than expected
- US jobs beat forecasts
- London stock market jumped, but then fell back
- Japan's market surged 4% overnight
- Moody's threatens to downgrade China - shares rally!
5.58pm GMT
The rally of recent days seemed set to continue after a strong performance from Asian markets, but as the day wore on it ran out of steam. A volatile oil price did not help. Early gains for the crude price reversed sharply in the wake of higher than expected US stocks. But then investors noticed the oil update also showed a fall in US production, which helped lift the crude price once more, as did talk that Saudi Arabia was negotiating a possible $10bn loan. So after all that, the FTSE 100 was virtually unchanged but other markets in Europe ended higher but off their best levels. The final scores showed:
5.09pm GMT
San Francisco Federal Reserve president John Williams has dismissed concerns that the US could be heading for recession.
He told a group of businessmen that domestic demand was strong enough to overcome any economic weakness abroad.
4.26pm GMT
As if to emphasise the volatility of the oil price and the markets generally, crude is now rallying despite the higher than expected US inventory figure.
The impetus appears to be a Reuters report suggesting that oil producer Saudi Arabia has asked banks to discuss giving it an international loan that could total $10bn.
(More) Crude oil moves higher after report that says Saudi Arabia is asking banks to discuss possible $10B loan. pic.twitter.com/7jtwmjRHvU
4.03pm GMT
Crude oil essentially the mafia gangster here - 'nice rally you have here, shame if something happened to it...; https://t.co/t0zdRZ3CxK
3.48pm GMT
News of the big jump in US crude stocks has had a predictable effect.
Brent crude, having been as high as $36.99 a barrel, is now down 1% at $36.41, while West Texas Intermediate - the US benchmark - has fallen 1.5% to $33.86.
After a positive start markets in Europe have slipped back from their intraday peaks as cautious profit taking started to creep into a market that has been on a good run of late. A slide back in oil prices appears to have been the main catalyst behind the caution now permeating into some of today's more cautious trading, as US oil inventories rose sharply by over 10m barrels, reflecting a similar sharp rise in the API numbers late last night.
3.41pm GMT
And storing all these stocks of crude is a growing issue:
Total US operational storage to be hit in 4-5 months according to Genscape pic.twitter.com/vzmjyqYy8b
3.39pm GMT
The headline rise of 10.37m was the biggest weekly increase since April 2015, said the Energy Information Administration.
And imports also rose sharply:
US CRUDE OIL IMPORTS surged to almost 8.3 million b/d last week, up from 7.8 million b/d in the prior week pic.twitter.com/VxVvwF6T3a
3.36pm GMT
US COMMERCIAL CRUDE STOCKS surged +10.4 million bbl last week and now +74 million bbl (+16.6%) above 2015: pic.twitter.com/ncZiyF1hdP
3.36pm GMT
Crude stocks in the US jumped by much more than forecast last week, renewing fears of oversupply at a time when producers are reluctant to reduce output.
They rose by 10.37m barrels to 517.98m, compared to expectations of a rise of 3.6m.
3.16pm GMT
Risks in the UK housing market are growing but they are not as bad as in 2014, according to Bank of England deputy governor Jon Cunliffe. Reuters reports:
[Cunliffe] also said the growth of the rapidly growing so-called "buy-to-let" rental property sector potentially poses a financial stability risk.
The Bank of England has asked the government for the power to intervene in the sector, which is likely to be approved. A public consultation on the matter will continue until March 11.
2.48pm GMT
More hints of slight weakness in the US economy, from the New York Institute of Supply Management index for February:
[BREAKING] US ISM New York Feb: 53.6 (prev 54.6)
2.37pm GMT
A dip in the oil price has taken the shine off the global rally, with Wall Street heading lower in early trading and other markets off their best levels.
Data from the American Petroleum Institute late on Tuesday showed crude inventories rose by 9.9m barrels last week, sending Brent down 0.7% to $36.55. Department of Energy data due out later could either confirm this trend, or reverse it, given how volatile the oil price has been in recent times.
2.09pm GMT
How resilient is the eurozone to another economic downturn?
Not very resilient at all, if you believe French bank Credit Suisse. They've warned that a new recession would trigger deeper political turmoil, putting the single currency under very heavy strain.
In a research note titled "Close to the edge", economists at French bank Credit Suisse warned the fate of monetary union hangs in the balance if Europe's policymakers are unable to ward off another global slump and keep in check anti-euro populism.
"The viability of the euro is contingent on the current recovery," said Peter Foley at Credit Suisse.
Recession will cause eurozone to collapse, warns French bank https://t.co/q48fOi9YGi pic.twitter.com/I7oaVJI9W0
1.59pm GMT
City chartists are squinting at their screens, wondering if the FTSE 100 rally is about to continue or fizzle out.
Apparently we've just reached an 'initial support level', based on recent trading, which could signal that the market will rise. Unless it falls though this level, in which case it might keep falling. Tricky stuff, chartism...
#FTSE100 #futures testing initial support at 6100, where short term channel's lower boundary meets 23.6% level pic.twitter.com/kZV6IozHvn
1.52pm GMT
Today's US jobs report show that the American economy isn't sliding into recession, says Paul Ashcroft of Capital Economics.
The 214,000 increase in the ADP survey measure of private sector employment in February, up from 193,000 the month before, is another illustration (as if any more were needed) that the economy isn't rolling over. The turmoil in financial markets, which has most recently begun to fade, obviously didn't stop employers hiring last month.
The breakdown shows that most of those gains (+208,000) were in the services sector, with construction adding +27,000. Manufacturing employment fell by 9,000.
1.26pm GMT
Just in: American companies took on more new workers than expected last month.
ADP, the US outsourcing group, reports that 214,000 new private sector jobs were created in February, beating forecasts of 190,000.
US private sector payrolls totaled 214K in Feb. vs.190K est. - ADP https://t.co/PARPH13571
12.44pm GMT
We shouldn't get carried away by the recent recovery in the stock markets.
Anxiety about the global economy may have eased a little, helped by the prospect of another dose of stimulus from central banks.
Michael Lewis' grumble in The Big Short is, I think, that more crooked bankers weren't sent to gaol, yet his book and the film show that the problem was an excess of fools more than an excess of crooks.
But what surprised me in the period after 2008, was that the world's economic leaders didn't push for debt destruction or forgiveness, but chose instead to use monetary policy to create enough inflation to deflate the debt away. In a global economy with excess supply of goods, and one where the marginal cost of supply of many services is infinitesimally small, I can't see why we should escape disinflation any time soon. And that's why the risk rally will be a short-lived affair.
11.54am GMT
After that early surge, shares in London have been dipping back.
As the lunchtime dash to the sandwich shop approaches, the FTSE 100 is now down 18 points at 6134 - partly dragged down by ITV.
11.41am GMT
Broadcaster ITV isn't getting much love from the City this morning. Its shares have fallen over 3%, despite posting a decent rise in profits this morning.
It may just be profit-taking, but there's also some anxiety about sales growth - ITV says ad revenue will be flat until the European Football hits the screens.
Related: ITV upbeat on ad market ahead of Euro 2016
Virgin Money shares jump 9% after profit quadruples https://t.co/y0G6xgYrqf pic.twitter.com/6q04vPEyUQ
Retail sales were expected to show a rise of 275%, with toys up 230% and clothes 300% ahead, the company said.
Canada and France are next in line for a Peppa retail launch. Markets in South East Asia and China were continuing to develop and expected to see strong growth in the next financial year.
Peppa Pig Owner Shares Down As Revenues Fall https://t.co/XXX1v8pBxQ pic.twitter.com/7rPVrSznxU
11.03am GMT
This rather pretty chart shows that the City is bracing for the pound to be rather volatile this summer, around the EU referendum (on 23rd June)
Investors are paying up to benefit from the going nuts around #Brexit referendum. Bloomberg volatility surface. pic.twitter.com/m4Bgapw2m6
10.32am GMT
The copper price has hit a three-month high today - another signal that economic demand is picking up.
Copper on the London Metal Exchange is up 1.55 per cent to $4,789 a tonne, the highest level since November. In Shanghai copper rose 2.7 per cent to 36,820 yuan a tonne (that's via the FT).
10.13am GMT
Today's stock market rally highlights a surprising fact - miners have been the best-performing shares in 2016.
Europe's natural resources companies are up around 5% this year, while the wider market has lost 7%.
Who'd have thunk it...miners only industry group that's gained YTD in Europe. Anglo American now rebounded 68%... pic.twitter.com/6alLOIX2oF
9.59am GMT
Uncertainty over Britain's EU referendum could be hurting the UK construction industry.
Mike Chappell, global corporates managing director for construction at Lloyds Bank Commercial Banking, explains:
The conversations I've had with those in the industry over the past month have been largely positive and many will be surprised to see a dip in the PMI reading.
"Commercial construction is increasingly buoyant, while in infrastructure sentiment is also positive, in spite of a number of key projects taking longer than expected to break ground. The reality is contractors are used to such delays and are otherwise comforted by the positive rhetoric suggesting improving the UK's infrastructure is a long-term priority.
9.44am GMT
This might dampen the mood a little. Growth across Britain's construction sector has hit a 10-month low in February, due to a drop in housebuilding.
Building firms interviewed by data firm Markit reported :
UK Construction PMI#forex pic.twitter.com/U96T70xjwv
Aside from the pre-election slowdown last year, the latest upturn in construction output was the weakest for over-two- and-a-half years.
"Survey respondents noted that underlying business conditions remained favourable, especially in relation to commercial building and infrastructure-related work, but some clients had been hesitant to commit to new projects so far in 2016. Reflecting this, new order growth weakened again and construction firms were the least optimistic about their year-ahead growth prospects since December 2014.
9.21am GMT
Over in the Treasury, a light may be flashing away on George Osborne's desk.
And that's because shares in Lloyds Banking Group have hit 73.8p this morning. That's just above the point where the government can sell its stake in Lloyds.
#Lloyds trading >73.6p. Time for George to press the sell button?
9.11am GMT
Benoi(R)t CAuri(C), European Central Bank board member, has dropped a clear hint that the ECB will ease monetary policy this month.
Speaking in Frankfurt, CAuri(C) said it was "vital" to stimulate economic growth and push inflation up, after seeing prices fall by 0.2% in January.
"We have seen from the recent sharp fall in bank equityprices that the sector is highly sensitive to a weaker-than-expected economic outlook
In that context, our commitment to our price stability mandate is vital to anchor expectations of nominal growth."
#Coeure says #ECB aware of concerns over impact of negative rates on banks' profits. But we still expect another deposit rate cut next week.
9.05am GMT
The global rally has also reached Istanbul, pushing Turkey's stock market to its highest level since the start of December.
London Capital Group analyst Ipek Ozkardeskay says encouraging economic data from America is luring money back into shares.
9.00am GMT
The French and German markets both up around 0.8% this morning, mirroring the rally in London.
It's early days (!), but March is proving to be a better month for shares than January or February.
Rising a further 30 points after the bell the FTSE has already tentatively touched the 6200 mark for the first time since the end of 2015. That is a marked improvement on the barrel-scraping 3 and a half year lows seen in the middle of last month, the UK index arguably aided by the somewhat volatile, but gradually steadying, oil prices, Brent Crude slipping around a 0.5% but still hovering around the $36.50 per barrel level with the latest US crude oil inventories to come this afternoon.
The Eurozone indices, meanwhile, are similarly buoyant; the DAX, approaching 9800, is at its highest point since the start of February.
8.50am GMT
Risk sentiment is on the up in the markets today, says Chris Weston of IG, sparked by the strong rally on Wall Street last night.
Weston identifies several technical reasons behind the optimism:
The Bloomberg US financial conditions index is about to turn accommodative for the first time in 2016.
Bloomberg incorporates the S&P 500, VIX, various credit spreads, the US dollar and money market spreads into this index. This will fill the Federal Reserve with confidence.
8.25am GMT
The London stock market has hit its highest level since New Year's Eve 2015, as the global rally reaches Europe.
In early trading, the FTSE 100 index of leading blue-chip shares has gained 39 points to 6192, following those strong gains in Asia overnight.
8.00am GMT
Michael Hewson of CMC Markets believes investors are taking confidence from recent rises in commodity prices.
They suggest demand for energy and metals may be picking up again, after some hefty falls last year.
The continued rebound in commodity prices is all the more welcome given solvency concerns about some of the more leveraged firms in the sector.
The recovery in copper, iron ore and oil prices has been a key arbiter in the rebound seen in mining and oil and gas stocks over the past few weeks, and the recent recognition by Chinese authorities that steps need to be taken to cut back on the overcapacity in the sector do appear to have also helped sentiment.
7.52am GMT
Switzerland has also smashed growth forecasts this morning.
"A year ago no one would've thought 2015 would wind up being as good as it was."
A myth is destroyed: Swiss GDP grew by 0.4% Q/q in 4Q, beating even most optimistic forecast despite strong Franc. pic.twitter.com/b7WfgGgvb4
7.46am GMT
Australia has helped drive shares higher today, by releasing stronger-than-expected growth figures.
Related: Australian economy grew 3% in 2015 to defy end of mining boom
7.37am GMT
China's stock market has posted its best day since November, despite credit rating agency Moody's threatening to downgrade the country's credit rating.
The Shanghai Composite has just closed 4% higher, amid hopes that Beijing policymakers will take more steps to stimulate the economy.
"The government's ability to absorb shocks has diminished and we want to signal this in the negative outlook."
7.25am GMT
A stunning session in Asia has sent Japan's Nikkei index surging by 4%.
A burst of renewed confidence helped investors to drive the Tokyo market up to its highest level since 8 February.
"Following the selloff and the fears of recession that emerged early in the new year, people pulled back aggressively from their previous expectations about how a rate hike from the Federal Reserve might unfold,
"Suddenly some of this lost confidence has been restored as we've seen a lot of recent economic data from the U.S. beating expectations."
7.12am GMT
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