On Tuesday, the European shares hit 3-month highs succeeding the gains on Asian bourses as upswing in oil prices, partially due to workers’ strike in Kuwait, feeding investors’ appetite to take on the risk.
The prices of oil shrugged off the weekend letdown of producers to settle to freeze output at meeting in Doha, nevertheless the Tuesday’s gains drove commodity-linked Australian dollar to 10-month high against its United States counterpart.
Brent crude, the international benchmark, last traded at 43.27 dollars per barrel, up approximately 40 cents. Kuwaiti output reduced to 1.1 million barrels a day from 2.8 million bpd in Mar. due to strike, though the analysts presume the impact to be transitory.
“It’s quite amazing how the oil prices have recovered from Monday’s lows. That’s shoring up risk appetite and pushing up commodity-linked currencies,” said the FX strategist at Nordea, Niels Christensen, adding, “As long as oil remains above 43 dollars a barrel we think commodity currencies would remain supported.”
The Oil’s upswing from lows around 27 dollars touched in Feb., along with cues of an improving United States’ economy and the U.S. Federal Reserve’s vigilant tactic to raise the interest rates, have aided lift stocks on the Wall Street & elsewhere in the recent weeks.
The pan-European FTSEurofirst 300 share index .FTEU3 rose 1.3%, led higher by the gains in the basic resources stocks .SXPP, gas and oil .SXEP & travel & leisure .SXTP.
The FTSEurofirst is up 14% from the Feb. lows. Britain’s FTSE 100 .FTSE added 0.5%
Australian shares hit highest since early 2016 while the New Zealand shares .NZ50 hit a new record high. Tokyo’s Nikkei .N225 gained 3.7%,
The Australian dollar rose 0.5% to 0.7782 dollars, hitting its strongest since June at 0.7803 dollars. The Canadian dollar had hit its highest since Jul.
The Assurances from Fed Chair Janet Yellen that central bank would be careful in raising the rates that have held dollar in check. The Fed meets next week & while no move is anticipated, investors will be on the look-out for cues of hike in month of June.