Stocks gain as oil jumps and sterling falls on EU exit fears

Global stocks rallied on Monday, boosted by a rise in oil and commodity prices, while the euro and the pound fell sharply against the dollar on fears Britain would leave the EU.

Sterling fell to a near seven-year low during the session after London mayor Boris Johnson said he would campaign to leave the EU ahead of a June 23rd referendum.

Battered oil prices jumped after the world’s oil consumer body said it expected US shale production to fall this year and next. Benchmark Brent rose 4.6 per cent to $34.53 a barrel, while US crude gained 6.5 percent to $31.56 a barrel.

Stocks, whose performance has been tightly linked to oil prices as the commodity’s slide has deepened, posted solid gains across major markets.

DUBLIN

The Iseq underperformed its European counterparts, rising only 0.6 per cent to 6,162 compared with an average jump of about 2 per cent.

To the fore was Bank of Ireland which saw its stock rise over 5 per cent to €0.26 after it reported an underlying pre-tax profit of €1.2 billion for 2015, an increase of 30 per cent on the previous year.

The Irish bank outperformed European’s financial sector, which enjoyed a 2 per cent bounce.

Kingspan also enjoyed a strong session on the back of annual results. Shares in the insulation specialist rose 2.1 per cent €23.83 after it reported a 47 per cent jump in sales to €2.8 billion for last year.

Dragging the index down was Ryanair, however, which fell 1.9 per cent to €13.90 in response to rising oil prices.

Food group Kerry, which has results on Tuesday, fell 1.7 per cent to €71. Packaging group Smurfit Kappa fell 2.6 per cent to €21.90.

LONDON

UK shares advanced as mining companies buoyed by strengthening metals prices outweighed worries over Britain’s potential EU exit and a drop for banking heavyweight

HSBC

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Britain’s FTSE 100 index rose 1.5 percent to close at 6,037.73 points while the FTSE 350 mining index hit its highest level since November 2015.

It was up 8 per cent, with Anglo American, BHP Billiton, Rio Tinto and Glencore gaining between 8.4 per cent and 11.8 per cent as the price of copper climbed to a two-week high.

Investment bank Jefferies raised its target price on Anglo American, which has gained more than 60 per cent this year, but retained its "underperform" rating on the stock.

The top fallers on the index were property stocks, viewed as one of the domestic sectors most exposed to a possible Brexit. Berkeley, Taylor Wimpey, Persimmon and Barratt Developments all fell by more than 4 per cent.

EUROPE

The pan-European FTSEurofirst 300 ended up 1.7 per cent. The index is down nearly 10 per cent since the start of 2016 due to concerns about a global economic slowdown.

Shares in Telecom Italia advanced after Vivendi increased its stake to 22.8 per cent, strengthening its position as the top shareholder.

Umicore rallied 7.2 per cent after UBS recommended buying shares of the maker of catalysts. Air France-KLM Group slid 5.7 per cent amid a strike of runway employees at the Charles de Gaulle Roissy airport, which the company said wasn't affecting traffic.

NEW YORK

Wall Street rose as prices of oil and other commodities surged, pointing to an uptick in investors’ risk appetite following a rout in global markets.

The recovery in prices of crude and metals comes after better-than-expected US jobs and inflation data, which has helped stabilise the market.

Gains were broad-based, with all 10 major S&P sectors higher. Including Monday’s gains, the S&P 500 is up 4.1 percent in the past 5 days.

However, the index is still down about 5 per cent for the year, in step with oil prices, which are hovering near 12-year lows.

– (Additional reporting Bloomberg)