Oil shares lead charge as crude hits new 3-year highs

28-Sep-2021 Intellasia | Reuters | 5:02 AM Print This Post

World shares rose on Monday, led by sharp gains in energy shares as crude oil prices soared to three-year highs of almost $80 a barrel while European stocks firmed after Germany’s election results ruled out chances of a purely left-wing coalition.

Stock markets benefited too from an ostensible easing in Sino-US tensions and Chinese authorities’ decision to pump more cash into financial markets to potentially offset the fallout from embattled real estate firm China Evergrande Group (3333.HK).

German shares jumped 1.1 percent (.GDAXI), while a pan-European equity index was up half a percent (.STOXX).

Gains were led by the energy sector, which rose almost 2 percent (.SXEP) while Wall Street too was tipped for a firmer session, with S&P 500 futures up 0.3%.

After Sunday’s election, Germany now faces months of negotiations to form a coalition government, with three parties needing to team up to clear the threshold of 50 percent of Bundestag seats. The likely outcome may be a coalition of the centre-left Social Democrats with the Greens and the liberal FDP.

“One key takeaway for markets should clear: a fully fledged centre-left coalition… does not have a majority in parliament,” analysts at RBC Capital told clients.

“This would have been the option that would probably have brought about the largest shift in policies in Germany and in the German stance towards European politics specifically as regards fiscal expansion. This option is now safely off the table.”

German 10-year government borrowing costs briefly fell in early trade before heading back up to rise to 0.217, its highest in almost three months.

Increasing focus is on energy markets where oil futures have climbed around $9 a barrel over September. Brent crude traded on Monday at $79.07 a barrel, while US crude rose 97 cents to $74.95.

Shares in European oil majors such as BP (BP.L), Shell and Total (TTEF.PA) rose as much as 2.5%

Coming on top of this year’s 300 percent rise in European gas prices, the price surges threaten to further inflame inflation expectations.



Category: FinanceAsia

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