Oil stocks rise but homebuilders fall again

Housebuilders are languishing again but overall London is enjoying a good day, up 50 points.  

London Stock Exchange
Source: Bloomberg

Yet another day in the green for financial markets has seen the FTSE push towards a new two-week high as European indices seek to follow their US counterparts higher. The creation of a new all-time high in the NASDAQ this week has done a lot to restore confidence within the investment community, providing hints that we could soon see something similar across Europe.

The dominant FTSE 100 gainers of the day clearly come from the oil and gas sector, feeding off the back of a 10% gain in crude over the past week. Homebuilders remain firmly in the red for the second consecutive day, which is likely to reflect the expectation that rates will begin to rise once more in the coming months. A note from Liberum on Tuesday clearly points towards a view that homebuilders appear ‘fully valued’ and with many at all-time highs, traders are becoming weary of the sector as a whole.

Mario Draghi has done little to dispel expectations of an expansion to ECB QE at its December meeting, with the president once more giving a heads up that the current policy will be reviewed in little over a month. This clearly gives a greater emphasis on eurozone data in the lead up to the meeting.

Today’s US non-manufacturing PMI spiked to the second highest reading of the last ten years, bringing with it greater expectations of a US rate rise in December. Services account for approximately 79% of US GDP and thus today’s reading will no doubt have substantial implications for growth expectations. Things are shaping up for a big December, with both the ECB and Fed moving in contrasting monetary directions.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.