World markets enjoy a welcome boost as the oil price went up six percent.
After oil prices causing continued global economic concern, prices leaped up today by almost six percent, to $41.77 a barrel, in the biggest improvement seen in the past month. This came as Russia hinted that their oil production could slow down soon, with the possibility of halting production at a later date, following the meeting of global representatives to discuss production activity later this month. This news provided some welcome positivity for world markets, boosting the FTSE 100 by over one percent and also ringing in positive change on Wall Street.
In response to the oil price increase, US Treasury debt yields rose to highs not seen for nearly two months, and US stocks surged upwards. The US is now hoping for more good news next week in the shape of multiple data releases, including data for Retail Sales, Producer Inflation and Consumer Inflation, all important economic indicators for the strength of the US economy and the dollar. These figures are expected to show growth after a volatile time for US markets, where the US dollar suffered at the hands of a strengthening Japanese Yen – often a sign of wider market and economic unease. US Federal Reserve Chair, Janet Yellen, tried to reassure markets in her comments that the US economy is still on a steady course, not ruling out further interest rate hikes, but investors’ forecasts reflect caution about the impact of economic shocks worldwide.
The positive impact of today’s oil price increase again highlights the interconnectivity of world markets, with the price of commodities directly affecting currency exchange rates. As the price of oil has been extremely volatile in recent weeks, so, too, have currency markets. Investors are keeping a close eye on oil performance as an indicator of global economic integrity, combining this with data on individual countries’ economic activity and comments from global policymakers to assess the risks of the ever shifting sands of world currency markets and the risks they pose to international business.