European stocks posted firm gains across the board on Thursday, bolstered by the surprise decision by the Organisation of the Petroleum ExportingCountries (OPEC) to work towards cutting oil production. Asian markets kicked off the day in positive territory, with markets trading higher thanks to gains from exporters, energy companies and a weak yen.
Basic resources and energy stocks led markets in Europe higher as investors cheered on OPEC. But US stocks pulled back on Thursday following two straight day of gains as the initial euphoria over the oil decision eventually faded, and crude prices stabilised.
The prospect of an oil production cut was enough to boost oil producers and the wider commodity sector in Europe on Thursday. Crude oil jumped 2.15%, taking energy shares up with it. Shares of Tullow Oil gained as much as 9.8% and Royal Dutch Shell added 6%. Shares of BP and Total SA were also well in positive territory, adding over 3% each. The 14-country OPEC oil cartel agreed to seek a cut in crude production when they meet formally in November – paving the way for the first cut in oil supply since 2008.
In other news, the fate of Deutsche Bank is in focus for markets amid speculation that the German bank could be in need of a state rescue. It’s looking like a rough autumn for Deutsche Bank shareholders and German politicians, as analysts and investors see little way forward for the too-big-too-fail institution to survive without either raising fresh capital or a government bailout – either of which will dilute shareholders’ stake. Deutsche Bank shares held on to moderate gains on Thursday, eventually ending the day 0.5% higher.
But Deutsche Bank wasn’t the only bank in the spotlight, as Commerzbank also stole a bit of the spotlight. Unfortunately though, not for very good reasons. The bank announced plans for a wide-ranging overhaul that includes laying off close to 10,000 jobs, or roughly 20% of its workforce, merging its two large units and scrapping its dividend.
The plan, which aims to restore profitability and capital cushions by 2020, is new chief executive Martin Zielke's effort to shrink the partially state-owned bank in the face of historically low interest rates and weak client demand.Shares in the bank fell on the news, trading down about 3% in early afternoon in Frankfurt, amid disappointment about the dividend cut.
Elsewhere, shares in PepsiCo were trading in the green on Thursday after the soft drinks maker posted better-than-expected quarterly results, sending shares up 1.2%. Likewise, ConAgra Foods shares surged 7.5% after the company swung to a first-quarter profit after a steep loss in the same period last year.
This article was issued by Rebecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, views and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.