Oil prices ease lifting stocks

Susannah Streeter, chief investment strategist at Wealth Club, said: “Falling oil prices have sent ripples of relief through financial markets, with hopes rising that inflationary pressures may ease off a little.

“The FTSE 100 has made a big stride forward in early trade, with European indices also moving higher, following gains in Asia. Mining stocks are on the front foot, given a lift by stronger set of factory figures from China, a mega consumer of industrial metals.

“Official manufacturing PMI edging back into expansion territory in September indicating a pick-up in activity, and raising expectations of stronger demand ahead.

“The latest analysis of oil flows from the Middle East, which shows a resurgence in movement has been a confidence booster.

“Tankers are getting through the Strait of Hormuz, despite complications, and the restart of the East-West oil pipeline in Saudi Arabia following attacks has also alleviated supply concerns.

“JPMorgan analysts estimate the 10-day average of crude exports from the region has recovered to 17.5 million barrels a day, around 98 per cent of pre-war levels.

“The US is also lining up another big supply of crude to flow into the market, offering to make up to 40 million barrels available from its Strategic Petroleum Reserve, as the administration eyes the mid-term elections and voter concerns over soaring fuel prices.

“But despite the easing in the immediate energy crunch, the refined market is still facing a squeeze, with global diesel stocks having been heavily run down, so there’s no immediate relief in sight for motorists filling up at the pumps. With no deal yet struck for a long-term resolution to the conflict, prices are set to remain elevated and volatile.

“So, consumers and companies are still bracing for financial pain ahead, with UK energy bills looking set to soar by 16 per cent in January.

“A winter chill looks set to descend for households, with the cost of keeping homes warm jumping, just as many are dealing with higher mortgage or rent costs, with the potential for other price hikes ahead.

“The Bank of England is on high alert to the prospect of companies passing on higher overheads through higher prices, and employees demanding more pay to keep up with the escalating cost of living.

“The latest growth snapshot for the UK shows that the economy was a little more resilient than expected in the second quarter of the year, with a revision upwards of GDP from 0.4 per cent to 0.5 per cent.

“Real household disposable income per head also rose by one per cent, but that spending power is being eroded, as the energy crunch has turned into a chronic phase.

“Growth in the economy is set to slow, as business confidence is being eroded by the hugely uncertain environment, with so many firms bracing for higher costs to land.

“The Lloyds Bank Business Barometer shows UK business confidence falling 12 points to 41 per cent in September, its lowest level since April 2025.

“It’s smaller firms feeling the pain more acutely, with many having less of a cushion to absorb a slowdown in customer spending and an increase in bills.”