Oil Recaptures $52, Driving Energy Shares Higher

European stock markets are mixed. DAX and most other Eurozone markets managed to recover early losses and are posting slight gains, as the EUR remains under pressure in the wake of Germany’s election result. The Spanish IBEX continues to underperform amid the ongoing conflict over Catalonia’s push for independence but the Euro Stoxx 50 is up, after a mixed session in Asia. North Korea jitters continue to weigh on investor confidence and a still strong pound is adding to pressure on the FTSE 100, which was down. U.S. stock futures have recovered losses and are slightly higher, oil prices are slightly down on the day, but the front end Nymex future is holding marginally near USD 52 per barrel.

NYMEX crude has rallied to four-month highs of $52.43, with follow-through buying seen in the aftermath of Friday’s OPEC/NOPEC meeting in Vienna. While the group did not extend its output cut agreement, it suggested that production caps may remain in place through 2018. That, coupled with recent upwardly revised demand growth forecasts, have supported oil prices.

UK businesses are building up retained earnings due to the uncertainties being thrown up by the Brexit process. Data from UK Finance, showed that non-financial companies built up deposits by 8.7% year over year in August, up from 7.5% year over year in July. Consumer borrowing growth also cooled, to growth of 1.5% year over year from 1.9% in the month prior. UK GDP data, released tomorrow, is expected to confirm growth at 0.3% quarter over quarter, half the rate being seen in the Eurozone. Moody’s cited the consequences of Brexit-related uncertainty as a factor in downgrading British sovereign debt to Aa2 from Aa1.

French Business Confidence Was Mixed

French business confidence mixed, with the manufacturing confidence reading unexpectedly falling back to 110 from 111, but the production outlook reading actually improving to 23 from 20. Services confidence meanwhile improved to 108 from 107 in August, as expected demand and the reading for the business situation improved. The price indicator in the services survey also turned much less negative. Overall then still a solid reading, even if, like in Germany, the national surveys turn out less optimistic than the latest PMI numbers.