Strong US data leads European markets higher Geopolitical tension in Algeria pushes Crude oil up

After a flat start European markets have taken their lead from across the pond after better than expected US job data and housing starts figures sent out a positive sign for the world’s largest economy and also prompted a strong start for Wall Street. Following the release of the US data European markets looked decidedly firmer. The FTSE headed into the close up 0.38%, the DAX up 0.5% and the CAC had gained 0.82%.

The number of Americans seeking unemployment aid has fallen to a five-year low. The figures released this afternoon show that weekly unemployment benefit applications fell 37,000 to a seasonally adjusted 335,000 – the lowest since January 2008. This is perhaps the most hopeful sign to date that the US job market in is healing and addresses some global growth concerns which have been negatively affecting sentiment recently.

Other strong data from the US regarding Housing Starts also helped to lift the markets both sides of the Atlantic. The building of new US homes accelerated in December to its fastest pace in over four years suggesting that housing is set to contribute a substantial boost to the US economy, which could in part make up for the slow down expected from tight fiscal policy in order to shrink the federal budget deficit. It is worth noting that these figures can be very volatile, however, the data today does add to a positive trend which has been developing.

Crude oil futures were also closely followed today as Crude Oil February delivery climbed 1.16% to above $95 the barrel following the attack by militants on natural-gas filed in Algeria, which consequently raised supply concerns. Any geopolitical tension carries a premium for energy prices, which is exactly what we have seen today. Furthermore this attack could indicate a longer term downturn in political stability for Algeria, which produced nearly 1.2 million barrels a day of crude and 88 billion cubic meters of gas in 2012.

Focusing on UK equities, heavyweight miners exerted significant pressure on the FTSE, Rio Tinto specifically hitting the headlines following the departure of the company’s top executive and a $14 billion charge. Tomorrow will also see miners remain in the spotlight due to the release of Chinese growth data.

On the upside Associated British Foods gained 3.6%, topping the FTSE leader board after reporting that revenue for the first 16 weeks was 10% ahead of last year. Banking stocks also edged higher following a positive note on the sector from Deutsche Bank.

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