The European stock market posted small gains Monday morning, to begin a short, relatively quiet holiday week, according to The Wall Street Journal. The European Central Bank did not eliminate the chances of additional stimulus and markets reacted accordingly. Plus, crude oil prices took a small step up after falling 40% this year.
Monday, December 22, 2014
The Stoxx Europe 600 gained 0.8% at Monday’s open. The German DAX 30 added 0.7%, the UK’s FTSE 100 grew 1% and France’s CAC 40 increased 1.1%.
European economists were optimistic for ECB stimulus following comments last week from one of the bank’s executive board members Benoît Coeuré. He asserted to the Wall Street Journal that the implementation of a government bond-buying program or quantitative easing would be the right move – it would only be question of how best to do it.
German consumer sentiment on the rise
In Germany – the eurozone’s largest economy – it appears as though the new year will start out strong, according to MarketWatch. Consumer confidence reached its highest level in eight years, as consumers anticipated Germany’s economic growth would accelerate in the first quarter of 2015.
Market research group GfK conducts a monthly survey that displayed consumer confidence increasing from 8.7 points in December to 9.0 points in January. The last time the survey scored higher than 9.0 was in December 2006, at 9.1.
“Consumers assume the economic weakness in Germany is only temporary and the domestic economy will return to the growth path in the next few months,” said the research company in a statement, according to MarketWatch.
Oil market outlook remains unclear
Saudi Arabian Oil Minister Ali Al-Naimi commented that oil prices would recover and the euro gained against the US dollar as a result, according to Bloomberg. The Organization of Petroleum Exporting Countries (OPEC) resisted the temptation to cut its production target of 30 million barrels a day, despite a 40% price drop over the course of the year. Brent crude traded at a 5-year low on December 16, at $58.50 per barrel. The price has since risen to 61.15 per barrel.
OPEC also maintained that prices would rebound in 2015, but it is possible that those comments were made in an effort to protect demand as American energy firms claim a growing market share. Shale-oil production in the American southwest and Midwest have been a boon for US output – cutting into OPEC’s imports to the US and contributing to the oversupply that helped create the price slide, according to the Wall Street Journal.
As American oil production increases, OPEC’s hold on oil supply will grow weaker and the oil market could undergo a major shift.
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