Oil leads Christmas cheer as worldwide markets rally

As the markets begin to wind down for Christmas, the Santa rally was still being felt this Monday morning, with a quiet economic day ahead.

After spending the last six weeks as the Scrooge of the economic world, oil has undergone a slight rejuvenation, closing last Friday at $62.29. Whilst it opened this Monday lower at $61.55, it did reach $62.94 after the bell; more importantly, in this current climate, any price above $60 per barrel for Brent Crude oil is a signifier of hope for the markets. What is especially surprising above oil’s current support level is that only yesterday OPEC big boy Saudi Arabia stated that, even if non-OPEC members cut production, it is not interesting in slowing its pumps. Traditionally this news would have meant another rapid fall for oil; yet its open was only marginally down, suggesting a new-found resilience in the commodity. However, this may be a resilience boosted by the Christmas season, and we could be in for another slump in the New Year.

Unsurprisingly, a big benefactor of oil’s latest rally was the rouble. Russia’s currency at one point dipped to 56 roubles per dollar, a massive boost when compared to the figures seen last week. Whilst Russia is not out of its currency crisis yet, this is certainly good news for Vladimir Putin.

The combination of the Santa rally, rising oil and a stabilising rouble meant that the global indices were nearing their start of the month highs, with the Dow Jones especially having a return to form. Last Friday it closed at 17803, not quiet managed to hit its futures-high of 17899.5. There is not much to rock the boat for America today, with an existing home sales release likely to have only a minor impact on the markets. With a quiet day, the Dow may not be able to reach the mythic 18000 level; however, as long as oil continues its marginal rally, the US markets can relax ahead of Christmas Day on Thursday.

The FTSE is in a similar, if not quite as exalted, position as the Dow Jones, regaining much of its November highs in a late rally based around the improbably rallies that oil has been performing. It opened slightly higher this morning, as the general lack of economic news meant its opportunity for significant growth was somewhat hampered. Yet, even more so than the American markets, if oil keeps its current levels, the FTSE will ring in a merry Christmas as its energy sector seeks to recoup lost ground.

Finally, the outlier to last week’s fantastic-Friday were the Eurozone indices, as the downgrading of Italian banks meant that the DAX and co. could not bask in the Christmas joy the other indices received. However, this morning saw a rally from these markets, with the DAX opening at 9805.8, after it had lost 100 points on Friday. With Eurozone consumer confidence to be announced later today, this area of the world is one of the few with data being released today that could have an effect on its Monday performance.