FTSE 100 Cushioned By Wall Street Gains, Resources Sector Weak

Oil prices were subjected to fresh selling as OPEC remained divided ahead of Wednesday’s key meeting. The resources sector came under pressure, but Wall Street gains helped limit net losses.

There was little in the way of positive leads from Asia on Tuesday with the Nikkei and Japanese markets moving slightly lower.

After opening little changed, the FTSE index declined in early dealings with European markets also lower.

The UK consumer lending data was stronger than expected with a net increase of £4.9bn for October after an increase of £4.7bn for September and consumer credit remained robust. Mortgage approvals also increased to the highest level for four months. The data overall boosted confidence in the outlook for consumer spending and the housing sector, although there was a limited reaction.

Energy prices were again an important focus during the day as tensions continued to increase ahead of Wednesday’s crucial OPEC meeting. Inevitably, there was a stream of rhetoric from OPEC officials with the main focus on Iran. The rhetoric overall suggested that Iran could be willing to freeze output, but was unwilling to cut production, while Saudi officials were insisting on a cut.

The net outcome was downward pressure on oil prices with a further daily slide in excess of 3.5% with Brent sliding below the $46.50 level. Commodity prices were also generally on the defensive, which had a negative impact on the UK index.

Sterling moved higher on the day, which also had a negative impact on the FTSE index, although there was no major impact.

There was a stronger tone in the financial sector following a rally in Italian banking stocks, although the overall mood remained nervous ahead of this weekend’s referendum.

There was an upward revision to 3.2% from 2.9% for US third-quarter GDP and the consumer confidence reading strengthened to the highest level for over nine years. US equities dipped lower in early trading and the FTSE index hit a daily low around 6,730 as oil prices were also subjected to renewed selling pressure.

After the generally weaker start, US indices moved higher after the data releases and these gains had an important impact in pulling the UK index higher late in the session.

At the close, the FTSE index declined 27.47 points and 0.40% at 6,772.00.

Oil prices will inevitably remain a very important focus on Wednesday with the OPEC ministerial meeting, although there is a possibility that the meeting will not be concluded ahead of the UK close.

Currency trends will also be watched closely with the potential for very choppy month-end conditions across all sectors and asset classes.

FTSE 100 Daily Chart

ftse29-11-16

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Tim Clayton

Tim is a contributing author to EconomicCalendar.com. He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.

Indices

NamePrice($)CommentChange($)Change %
S&P 5002,215+2.29+0.10%
NASDAQ5,331-2.24-0.04%
NYSE10,995+24.68+0.23%
FTSE 1006,891.24+111.40+1.64%
DAX10,977.18+201.86+1.87%
CAC 404,685.78+53.84+1.16%
EURONEXT 100897.86+6.70+0.75%
Nikkei 22518,496.69+136.15+0.74%
HANG SENG INDEX22,800.92+125.77+0.55%

Commodities

NamePrice($)Change($)Change %Comment
Light Sweet Crude Oil Futures,D47.48-0.01-0.02%
Gold Dec 161,176.10+8.50+0.73%
Silver Dec 1617.10+0.36+2.15%
Copper Dec 162.62-0.05-1.82%