FTSE 100 recovers after oil price climbs
After Brent Crude climbed above $63 per barrel early on Monday morning, the FTSE 100 index recovered after suffering its worst week in three years. As expected, so far today, the top performers have been oil-related stocks.
By 10:51 GMT, the FTSE index was 0.7% higher at 6,346.50, after plunging by 6.6% last week.
So far in 2014, the index is 6% lower than at the end of last year. It climbed 14% in 2013.
The FTSE Index, which gauges average share prices of the 100 largest companies (by market capitalization) listed on the London Stock Exchange, has declined by 5.8% in December, mainly because of plunging oil prices and disappointing Chinese economic data.
Most experts predict that oil prices will trend downward in 2015, despite this morning’s climb. Last week, the IEA reduced its forecast for 2015 oil demand growth.
Forecasters see 2015 with oversupply and weak oil demand, a combination which will likely push prices down further.
Hopefully, investors will gradually factor in oil prices and the equity markets will stabilize.
The oil & gas index in the UK gained 1.8% this morning, after sliding to a 4-year low when trading opened.
Investors expect China to take measures to boost its economy, which will help mining companies, and thus metals prices and mining stocks.
On Monday, however, Australian analysts have forecast that iron-ore prices will trade at about $60 per metric ton, which is sharply lower than their previous $92 prediction.
In early trading in London, the mining index rose by 0.7%.
There is concern in Europe regarding Greece’s political situation. The coalition government has a parliamentary vote on Wednesday that could mean its collapse if it does not get the necessary backing. Greek newspapers doubt whether it will have the required support.