A jump in the price of oil and surprisingly positive service sector data from China has helped lift European shares off three-week lows on Wednesday. The American Petroleum Institute reported a 4.6m draw in US oil inventories in the past week which has reduced concerns of a supply-glut and shifted focus away from the upcoming producer meeting.
Trading could be cautious ahead of Federal Reserve minutes released after today’s European market close. The minutes are often stale given the two-week lag but speculation of a rift between policymakers has increased the importance of the release in April.
Reports that the Allergan (NYSE:AGN)-Pfizer merger has been terminated has counter-intuitively sparked buying in other UK and Irish pharmaceutical groups. Speculation that Pfizer (NYSE:PFE) will look for another partner in its quest to relocate its headquarters and lower its tax burden has sent the shares of Shire (LON:SHP) and AstraZeneca (LON:AZN) flying.
Mergers appear to be coming undone by the day. The US justice department is reportedly looking to sue to stop the Halliburton (NYSE:HAL) - Baker Hughes (NYSE:BHI) deal which would have created the world’s largest oil-services company.
Shares of Swedish multinational clothing giant H&M gained over 3% after well-received earnings. Sluggish sales were naturally blamed on the weather and an early Easter. The bigger issue for H&M is its strategy of sourcing its clothes in Asia where currencies are pegged to a strong dollar when competitors like Zara-owner Inditex (MC:ITX) buy within Europe.
Glencore (LON:GLEN) shares gave up initial gains on the news it will offload a big stake in its agricultural business. The more assets Glencore disposes of, the more shareholders will begin to weigh up the benefits to the balance sheet versus the negatives of lost future revenue
A rebound in the price of oil is trumping the derailment of the Pfizer-Allergan merger and the political uncertainty in the presidential race as US markets look to open higher.
Underdogs Ted Cruz and Bernie sanders upset frontrunners Hilary Clinton and Donald Trump with primary victories in Wisconsin. Markets appear to be ignoring election uncertainty for now since Americans failing to rally behind one of the Republican candidates only increases the chances of victory for establishment candidate Hilary Clinton.
USA pre-opening levels
S&P 500: 11 points higher at 2,054
Dow Jones: 70 points higher at 17,673
Nasdaq 100: 23 points higher at 4,493
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