Logic does not seem to be playing a great part in the stock market roller coaster, but oil seems to continue to do so. Wednesday morning saw equities take a turn for the worse as the Saudi deal to curtail production was described by Iran as laughable. Later in the day, a very disappointing services and composite purchasing managers survey out of the US, should have added to the gloom. A recovery in the oil price as the day wore on saw US equities produce a 2% about turn, to close the day modestly higher. This gave Europe the confidence to open strongly on Thursday, apparently putting Wednesday’s woes behind it. Even managing to ignore a 6% fall in the Shanghai Composite index of leading Chinese companies. The currency markets may be fretting over “Brexit” the stock markets less so
After Wednesdays disappointing survey, and ahead of Friday’s US GDP 4th quarter report, came the latest durable goods order report. After December’s disappointing drop January saw a sharp pick up in orders. This report was more consistent with the recent improvement in economic data from the region.
The UK office for national statistics announced its estimate for the 4th quarter of 2015 of 0.5%; this was a slight improvement from the third quarter of 0.4%. Company results helped sentiment on Thursday as Lloyds announced the much anticipated dividend increase and an improvement in its core tier one ratio. With a couple of days left in the month the FTSE 100 is batting a score draw, after a volatile month.
By the end of Thursday evening the S&P 500 closed above its 50 day moving average, for the first time in 2016. The price of West Texas oil jumped to $33 a barrel as the Saudi’s, Russians and Qatar have agreed to meet in March. All looked rosy in the garden once again.