FTSE 100 index opens higher as oil price rebounds on production freeze as Anglo American, BHP Billiton and Glencore share prices jump
The FTSE 100 index opened higher this morning after markets were encouraged by quantitative easing hints from European Central Bank president Mario Draghi yesterday, as well as the rebounding price of oil.
The UK's blue chip index rose 0.93 per cent to 5,878 points, led higher by Anglo American, BHP Billiton and Glencore.
"European markets picked up where they left off at the end of last week yesterday with another strong day of gains, helped by a rebound in oil prices as well as some soothing noises from Chinese policymakers about the direction of the yuan, and a muted reaction in Chinese stock markets as they returned from their New Year break to post only a modest decline," said Michael Hewson, chief markets analyst at CMC Markets.
The rebound in European benchmarks was also helped by further dovish pledges from ECB President Mario Draghi to do more next month to help underpin the economy in Europe, Hewson added.
Anglo American's share price rose 1.3 per cent to 398.17p after the company unveiled a turnaround plan. This morning it said earnings slumped in 2015.
Meanwhile, BHP Billiton and Glencore rose 4.17 per cent to 722.5p per share and 3.95 per cent to 105.28p per share respectively. Rio Tinto's share price opened 3.19 per cent up at 1,910p.
Banks had a more subdued start to the day after volatile trading over the last week. HSBC fell just 0.11 per cent to 445.9p per share after yesterday announcing it would remain headquartered in the UK. Lloyds was up 1.31 per cent at 60.63p per share, while Royal Bank of Scotland rose 1.54 per cent to 250.1p per share. Barclays' share price opened at 161.6p per share, a 0.53 per cent rise.
Oil prices were close to $34.75 per barrel on speculation there could be production cuts, as the world's largest oil producers – including key Opec nations – prepared to meet in Doha.
Given the rebound, BP's share price also surged, rising 5.33 per cent to 347.2p. And Shell rose 2.86 per cent to 1,584p per share.
However, all the positive news is not without warning: despite the rebound seen in financials and oil and gas stocks in the last couple of days the factors that have driven the sharp declines in the last few weeks haven’t changed, said Hewson.
"And for all of Draghi’s soothing comments, markets are becoming much more sceptical of the ability of central banks to do anything other than extend and pretend, or think creatively, with their current policy merely being the equivalent of monetary policy double or quits," he added.