Monday, 22 February 2016

Miners Push Europe Stocks Higher as FTSE 100 Gains With BHP

The rebound in stocks is just a reflection of the heightened volatility in equity markets since the start of the year. After falling sharply in the past few weeks, stocks are now responding to stronger oil and some positive news from select energy firms.

It is no sign of a real turnaround in the resources sector and the general picture is still pretty dire. Prices of most industrial metals remain near multiyear lows. Commodity markets are plagued by oversupply, as production capacity has been bolstered by a surge in investment during the boom years, while demand has weakened in line with China's economic slowdown. Producers' response to the current price slump will eventually halt the downward trend in prices, but we do not expect this to happen until much later into the year.

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