Global equity markets managed to build on support at Friday’s close today, extending gains ahead of Christmas as investors sentiment continued to improve. Most major European equity benchmark indices posted modest gains throughout the session after momentum carried over from a firm Asian session, with London’s blue chip index on track to close 0.4% higher, while the DAX looks to add as much as 0.6% and the CAC remained poised to close 0.3% higher.
At the time of writing US indices were trading marginally higher, holding on to opening levels as the recovery in Europe continues to gather pace. Markets gained further support today on growing expectation that Greece could still avoid a snap election which would otherwise derail the recovery path in the region. Prime Minister Antonis Samaras extended an olive branch to pro-Europe independents, offering them terms if they backed his choice of President.
However, protracted gains in risk assets may be short lived as investors continued to focus on the oil market with front month Brent futures erasing the day’s earlier gains, sinking back below $62.50/bbl after earlier trading towards $63/bbl. Despite encouraging comments from gulf oil ministers over the weekend which initially saw crude prices build on Friday’s close, thin trading throughout the day and the persistently bearish fundamental outlook have kept prices under pressure throughout the session and could prevent any material improvement unless the demand outlook drastically improves.