World stock markets cheer retailers

London, European stock markets and Wall Street ventured back into positive territory today, buoyed by upbeat news from global retailers and other corporates. 

European stocks started the day mostly lower as the International Energy Agency (IEA) sent a stark reminder that the world economy is headed for Brexit-created uncertainty and therefore weaker oil demand.

But investors took heart from the IEA's assertion that an oil production glut is still set to disappear by the end of the year, which prompted a bump in the oil price after earlier losses in Asia.

This, in turn, boosted energy and commodities stocks, notably in London, where the FTSE 100 index reversed early losses to close 0.7 per cent higher. 

Paris even managed a gain of 1.2 per cent, while Frankfurt rose 0.9 per cent to close at a year-high.

"European markets have been seeing unusual sessions these past few days," IG France analyst Alexandre Baradez said.

"Volumes are low, and there are few economic data, but there's still a positive impulse." 

However, the basis for new-found optimism may well be fragile given a weak macro-economic environment, he warned.

Traders found inspiration from healthy earnings from China's Alibaba, and plans announced by American retailer Macy's to shut 100 of its 728 stores and bolster investment in online shopping.

Sharp rises in both companies' stocks helped lift Wall Street.

"US stocks are gaining ground in early action, along with European markets, aided by some mostly upbeat global earnings reports, which are overshadowing the recent weakness in crude oil prices," analysts at Charles Schwab said.

Citing a weaker outlook for the world economy following Britain's vote to leave the European Union (EU), the IEA today cut its oil demand growth forecast for 2017.

That initially weighed on oil prices with benchmark contracts falling in Asia, London and early New York.

But the IEA added that oil oversupply, which has been weighing on the crude price in recent months, will disappear in the latter part of 2016, causing a recovery in oil.

In foreign exchange meanwhile, dollar gains were capped as traders await clearer signals on the timing of a possible US interest rate hike, with expectations that the Fed will move cautiously.

Investors were awaiting also the release of more Chinese economic data, including industrial output and retail sales, due this week.

PTI