Oil Holds Near 12-week High, With Energy Stocks Soaring

The price of oil (OIL) held at over $43 a barrel in overnight trading on Sunday and into this morning’s European open, its highest level since early September. That follows the third straight week of gains for oil prices, as progress towards a widely available COVID-19 vaccine has raised hopes of an improvement in energy demand.

After substantial gains the prior week, stocks paused last week. The Dow Jones Industrial Average fell back 0.7%, versus a 4.1% gain the previous week, while the FTSE 100 was up 0.6% versus 6.9% the week before.

Retail sales, initial jobless claim data shows slowing momentum

Of the three major US stock indices, only the Nasdaq Composite turned in a positive last week with a 0.2% gain. Small-cap stocks turned in another week of outperformance, with the Russell 2000 (IWM) index up 2%. Since late September, the small-cap index, has rallied by more than 20%.

Aside from more vaccine progress news, investors had initial jobless claims and retail sales data to digest. Retail sales figures were mixed. While they showed an increase of 0.3% from September to October, momentum has still slowed down. Similarly, last week’s initial jobless claims data was worse than expected, with an increase of 31,000 to 742,000. In a Friday note, analysts at Edward Jones said that the data “in our view, confirms that this economic recovery is likely to be choppy before ultimately returning to pre-pandemic levels.”

S&P 500: -0.7% Friday, +10.1% YTD (-0.8% last week) (SPY, SPX)

Dow Jones Industrial Average: -0.8% Friday, +2.5% YTD (-0.7% last week) (DIA)

Nasdaq Composite: -0.4% Friday, +32.1% YTD (+0.2% last week) (COMP)

Double-digit week for Taylor Wimpey, Imperial Brands, BAE

London-listed stocks continued to make progress last week, although the gains posted by the FTSE 100 and FTSE 250 were of a smaller magnitude versus the previous week. The FTSE 100 added 0.6% over the course of the week, while the FTSE 250 gained 1.2%. However, several names in the FTSE 100 delivered double-digit gains last week. Housebuilder Taylor Wimpey (TWODF) gained 12.3%, tobacco giant Imperial Brands (IMBBY) added 10.4%, and BAE Systems (BAESY) was up 10.6%. Taylor Wimpey’s share price has surged by 40% over the past month. At the other end of the spectrum, Sage Group (SGGEF) suffered a tough week, falling 12.9%. The news came as the accounting software firm said that it will increase its spending on cloud computing in order to capture more of the small business market. In the FTSE 250, Micro Focus International (MFGP) and Just Group helped take the index higher, with gains of 24.2% and 26.3% respectively.

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