World shares had their biggest jump in over a month in limited trading Monday on news of an agreement between Saudi Arabia and Russia sent oil prices surging and investors continued to readjust their thinking on the path of US interest rates after the weak jobs data for August.
European stocks touched an eight-month high as oil and mining firms grabbed what at one point was a 5% leap in crude prices, which was later reduced.
US markets were closed for a Labour Day public holiday meaning there was no lead Wall Street. That helped send overnight trading on the ASX200 market down 22 points, which means a weak start in Australia this morning.
The Stoxx Europe 600 inched up by about 0.1% to close at 350.62, leaving it at levels not seen since last April as oil stocks had solid gains on the back of the news of the deal between Russia and the Saudis.
But at the end London was down 0.2% as bank shares fell with the downgrade, Germany’s Dax lost 0.1% and the CAC in Paris ended steady. Gains were made in smaller bourses in Italy and Spain.
Oil’s rise had its the second solid rise in a row as news of the Saudi/Russia pact fanned speculation that major producers could strike a firmer deal in at a meeting Algeria later this month.
Brent crude futures for November delivery were last up $US1 per barrel at $US47.17 a barrel having been as high as $US49.40 and US West Texas crude for October delivery was up at $US45.17 having been as high as $US46.53 a barrel.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan ended up 1.6 percent, while Japan’s Nikkei rose 0.7 percent to its highest close since May 31.
Saudi Arabia and Russia, two of world’s top oil producers, announced at the G 20 leaders meeting in China that they would start working together to stabilise the market, including limiting output.
“Freezing production is one of the preferred possibilities," Saudi Energy Minister Khalid al-Falih said speaking alongside Russian counterpart Alexander Novak. “But it does not have to happen specifically today."
Oil eventually lost its initial gains as traders noted the lack of immediate measures (i.e. it was all talk, no action).
A major bar to any deal is Iran, OPEC’s third largest producer, which has said it would only cooperate in talks to freeze output if fellow exporters recognised its right to fully regain market share.
Iran is ready to raise its output to 4 million barrels per day in a couple of months depending on market demand, a senior official from the National Iranian Oil Company said.
