Opec’s production cap deal sends Brent crude surging over $53 per barrel, while the pound has hit a two-month high
‘Gamechanger’ Opec cut drives prices higher
Petrol prices to rise, warn experts
Sterling at two-month high against the euro
Pound jumps on single market access hopes
Analysts: Will deal really stick?
5.46pm GMT
Right, that’s all for today. A quick recap.
December has got off to a lively start in the financial markets, with big moves in the commodity and foreign exchange arenas.
10-year Treasury yield touches 2.470% - its highest in 17 months https://t.co/1Y0o7TkRWQ pic.twitter.com/Rdq86QGfNy
Related: Italy referendum Q&A: the big economic questions answered
5.24pm GMT
Over on Wall Street, machine and equipment firm Caterpillar briefly suspended its shares today so it could warn that analysts profit expectations are ‘too optimistic’.
Caterpillar cited various headwinds, such as Brexit uncertainty, Europe’s slow recovery and volatility in the oil price. It also warned that any infrastructure programme from Donald Trump probably wouldn’t help its earnings in 2017.
Caterpillar stock resumes trading: encouraged by potential U.S. infrastructure bill $CAT pic.twitter.com/KsNI5iqnuj
4.47pm GMT
Now this is interesting....oil giant BP has signed off on a $9bn project to expand its Mad Dog oil field in the U.S. Gulf of Mexico.
“This announcement shows that big deepwater projects can still be economic in a low price environment in the US if they are designed in a smart and cost-effective way.
“It also demonstrates the resilience of our strategy which is focused on building on incumbent positions in the world’s most prolific hydrocarbon basins while relentlessly focusing on value over volume.”
OPEC impact: day after #oil cuts deal BP green lights $9 billion project in the Gulf of Mexico pic.twitter.com/08CjjziRWG
4.29pm GMT
Central Bank news! Agustin Carstens, head of the Bank of Mexico, has resigned.
Carstens, one of the world’s most experienced central bankers, has been appointed to run the Bank of International Settlements (BIS is basically the central bankers’ central bank).
Mexico's central bank governor Agustín Carstens will head up the Bank of International Settlements next year https://t.co/J3DnLoRue4 pic.twitter.com/5l8qZGwZs6
Carstens departure adds some uncertainty, but Banxico's policy outlook doesn't change. They will likely follow the Fed with a hike in Dec.
Carstens' move also means #ECB's Coeure will stay in Frankfurt. His mandate ends in 2019, just like #Draghi. Clearly a potential successor.
3.59pm GMT
Boom! The Brent crude oil price has just hit its highest level of the year.
A barrel of Brent for February delivery just changed hands at $53.79, which is the most expensive since October 2015.
For OPEC, so far, so good. Brent just hit a one-year high of $53.79 pic.twitter.com/HuqBBgVEyx
#Brent has hit a new 2016 high, briefly breaking prior old high at $53.70. This level would have been a key objective for many bulls ^FR
“Whilst at present the news is good for the markets, it is much more difficult to say how this will play out in the longer term.
We’re currently experiencing a knee-jerk reaction, unsurprising since this is the biggest co-ordinated action in eight years. It is likely that this will run on for a little while longer but how the markets price in the unexpected oil inflation is something we are yet to see.”
3.52pm GMT
Former cabinet minister Iain Duncan Smith, who campaigned for Brexit, has criticised the idea that Britain might make payments to the EU after leaving the bloc.
“My sense is that I don’t think that he was absolutely answering the question that was posed to him.
“What he’s talking about here is how do you get a deal that allows British and Europeans to access each others’ markets without the necessity of tariff barriers or artificial barriers against service etc.
3.32pm GMT
Today’s pound rally follows the currency’s best month since 2009.
Sterling gained 6% against the euro in November, 1,5% against the US dollar, and almost 15% against the Japanese yen.
Momentum is particularly strong against the yen and its recent performance has been staggering, GBPJPY is up more than 14% since the start of November!
Political risks around Brexit are receding, as political risks elsewhere start to bite. The cost to insure UK sovereign debt has fallen sharply since spiking back in June.
3.13pm GMT
Good economic news from America: its factory sector is growing at its fastest pace since the Brexit vote.
The ISM manufacturing index has jumped to 53.2 in November, from 51.9 in October, which is the fastest rate since June. Firm said they were benefitting from strong domestic demand.
The US good data parade just keeps rolling on...
3.05pm GMT
No wonder City traders may be looking frazzled:
Man, what a crazy month for markets pic.twitter.com/2uuxHOBZxD
2.47pm GMT
The US crude oil price has hit a five-week high, as traders push it through the$50 per barrel mark.
2.32pm GMT
Oil is surging even higher, as commodity traders continue to react to the Opec supply cut deal hammered out yesterday.
Brent crude is now up 3% at $53.44 per barrel, a near two-month high, and a really substantial surge from $46/barrel before the Opec meeting.
Ain't no mountain high enough. Brent atop $53 as oil takes off again, still basking in the #OPEC afterglow. #OOTT https://t.co/U20DCf6xih pic.twitter.com/1Sqrv96KH8
“Yesterday’s agreement has truly changed the landscape for oil over the coming years, putting a floor of $50 a barrel under oil prices.
“Prior to this agreement, the environment of sub $50 oil was likely to persist, but this move sufficiently addresses the supply/demand dynamics, with some 3.5% of supply being cut from January.
2.11pm GMT
Today’s rally has pushed the pound to nearly a three-month high against the euro.
That means it’s just 8% below its pre-referendum levels (having been down 15% at one stage).
1.56pm GMT
The pound just spiked even higher against the US dollar, after the latest American unemployment figures hit the wires.
Sterling hit $1.268, up 1.7 cents, as data showed that the number of Americans filing new claims for jobless benefit has hit a 5-month high.
BREAKING: US weekly jobless claims total 268,000 vs. 253,000 estimate https://t.co/QrY2HcxaAk
1.40pm GMT
Here’s some more reaction to David Davis’s comments, and the bounce in the pound:
David Davis confirms what PM has refused to.. we might keep paying into EU budget after Brexit for access to markets or other deals
“The idea that single market is still a priority is a move away from the ‘hard Brexit’ line.
Since the two or three major selloffs we saw earlier this year, the Bank of England has changed its stance to holding rates next year, the data has been better and now the rhetoric has softened.”
“Sterling is on the tear this morning on hopes for a soft Brexit.
“David Davis said the UK could contribute to the EU budget in return for access to markets and that has fuelled a rally for the pound.”
“Sterling’s rehabilitation is gathering steam, having broken through the €1.19 level against the euro today for the first time in almost three months.
A surge of nearly 1% versus the US dollar has also lifted the pound back above US$1.26. Gains come amid signs of a more compromising approach to upcoming Brexit negotiations from the UK government, with Brexit minister David Davis saying Britain would consider contributing to the EU budget in return for retaining access to European markets.
1.05pm GMT
Our Politics Live blog has full coverage of David Davis’s comments on Brexit:
Related: UK may continue to pay EU after Brexit for single market access, Davis says - Politics live
12.43pm GMT
David Davis’s suggestion that the UK could pay for access to European markets after Brexit have also sent the pound rallying against the euro.
Sterling has gained nearly one eurocent to €1.19, its highest point since September 7th.
The pound rally, which has occurred against most major currencies has follows comments from Brexit Secretary Davis, which indicate that the UK may be willing to make trade-offs for access to the single market.
The euro is currently under pressure in anticipation of the Italian Constitutional Referendum and Austrian Presidential Election, taking place on Sunday, where shock results could result in further volatility.
12.21pm GMT
The pound has surged by 1% this morning after Brexit secretary David Davis suggested that the UK could make payments in return for access to the European markets.
The comments have fuelled hopes in the City that Britain might avoid a ‘hard Brexit’, and that Britain’s financial services industry, for example, could retain access to the single market after 2019 (the likely exit date).
David Davis has suggested that the government would consider making contributions to the EU budget in exchange for access to the single market, saying his Department for Exiting the EU would consider all options to get the best deal with the bloc.
During questions in the House of Commons, the Labour MP Wayne David asked if the Brexit secretary would “consider making any contribution in any shape or form for access to the single market”.
Related: Brexit secretary suggests UK would consider paying for single market access
“These headlines suggesting Britain may be able to access the single market are generating substantial sterling demand from traders and investors looking to reduce their short positions and unwind hedges.”
11.59am GMT
Consumers should brace for higher petrol prices soon, warns Michelle McGrade, chief investment officer of TD Direct Investing:
“It’s been clear for some time that the low price of oil has been hurting producers. In my view, it was only a matter of time before OPEC decided to cut production.
A higher oil price, together with a strong US dollar, makes things tougher for UK consumers because not only will petrol be more expensive, but this could fuel a stronger surge in inflation than originally expected, as inflation is highly correlated to the price of oil.
Related: UK petrol prices set to rise after Opec deal
11.12am GMT
Back to Opec.... and the oil price is clinging onto today’s gains, as analysts keep kicking the tires of yesterday’s deal.
Brent crude is hovering around $52.50, a 1.2% gain today.
OPEC has suggested the deal is contingent on getting this 600,000 b/d from non-OPEC – we don’t yet know if it could unravel if this doesn’t happen.
There are lots of pieces in the jigsaw that are yet to fall into place. If OPEC members stick to the script and if non-OPEC comes up with the goods we might be on for further gains in crude. If not this rally could easily lose momentum and fade.
Supporting the market in this way hands an opportunity to U.S. exploration and production firms to hedge future production at higher prices and expand their own drilling budgets to fill some of the gap left by Saudi Arabia, Russia and others.
Over the next six months, we will see if OPEC’s coalition can hold. Assume it does -- a huge assumption at this point -- and in the following six months we will see how much the frackers will do to undermine it.
How long will #OPEC's production-cut coalition hold? https://t.co/QzbtCquBrc via @bfly #OOTT pic.twitter.com/nR0Qy6Z6xV
10.33am GMT
Now this really is a moment..... unemployment across the eurozone has fallen below 10% for the first time in over five years, and is now at a seven-year low.
Eurostat reports that the jobless rate fell to 9.8% in October. September’s figure has been revised down to 9.9% (from 10%).
Unemployment in the eurozone falls below 10% for first time since April 2011 - figures helped by falls in Italy and France#eurozone
Euro area unemployment rate fell to a 7-year low of 9.8% in October. Guess at some point, people will notice.
10.18am GMT
Economists fear that British factories could hike their prices to help them handle a sharp rise in raw material costs since the summer.
George Nikolaidis, senior economist at EEF, says the weaker pound is both a challenge and an opportunity for manufacturing:
While the more competitive exchange rate means UK manufacturers are well positioned to capitalise on the recovery in demand in key export markets, higher input costs are coming through the manufacturing supply chain thick and fast to put the squeeze on profit margins.
Manufacturers are inevitably looking to pass these costs on to customers adding to the inflationary pressures already building up in the UK economy.”
Exporters continue to take advantage of a weak sterling but it is increasingly looking like a case of having to take the rough with the smooth as businesses start to pass on higher import costs, which could accelerate inflationary pressures as we enter 2017.”
Already looks like any Brexit manufacturing boost is coming under pressure from costs increases and slowing export order book growth
9.38am GMT
Breaking: Growth in Britain’s manufacturing sector slowed last month, despite the weak pound helping firms export abroad.
The UK factory PMI, which measures activity across the sector, has fallen to 53.4, down from 54.4 in October.
The effects of the weak sterling exchange rate continued to be felt by manufacturers during November.
On the plus side, the boost to export competitiveness led to a further increase in new business from abroad. Companies reported improved demand from the USA, mainland Europe and the Middle East.
9.16am GMT
The Financial Times has a good piece about how some Opec members are paying a higher price than others to get the deal through:
Here’s a flavour:
Saudi Arabia and its Gulf Arab allies, including Kuwait, United Arab Emirates and Qatar, have agreed to shoulder the bulk of the cuts. They are banking on a quick recovery in price to ensure they do not lose revenues or surrender market share to other suppliers.
Iran and Iraq, which sit outside the Gulf bloc in the Middle East, have sacrificed less. Most oil analysts see the limited concessions they made to let the deal succeed as largely face-saving technical measures to placate the Saudis.
Opec agreement: the winners and the losers https://t.co/m5FPhxUbPV via @FT
9.06am GMT
Newsflash: Europe’s factor sector has posted its strongest growth in close to three years.
Data firm Markit’s monthly manufacturing PMI has risen to 53.7, up from 53.5 in October. Any reading over 50 shows an expansion, and this is the best reading since January 2014.
#Eurozone Manufacturing #PMI at highest level since January 2014. Cost #inflation at 56-month high https://t.co/AACqQLchy9 pic.twitter.com/TWB5kkgnGQ
9.03am GMT
Dominic Rossi, global CIO equities at Fidelity International, urges caution:
“I would not get too excited by the Opec cut. Compliance will be a problem, and the Russians will pump more gas instead.
In the meantime, the long-run marginal cost of US shale continues to fall. I would not chase this oil price rally too hard.”
8.43am GMT
City experts are a little sceptical that Opec’s deal will actually push oil prices much higher.
Spanish banking group BBVA suggest warn that “implementing and monitoring” the deal could be constrained by “geopolitical factors” (for example, Saudi Arabia and Iran are already backing rival sides in the Yemen conflict)
U.S. | OPEC and the art of the deal https://t.co/XV5tVR0tBJ via @BBVAResearch pic.twitter.com/x7c6IZ772i
#Oil likely to see new 2016 highs short term but "whether prices can be sustained above $60 in 2017" depends on U.S. shale - ANZ#OPEC #OOTT pic.twitter.com/ar8Zp8Tgtl
Part of 1.2mn oil production cut of OPEC includes 200k cut from Iraq.
Is that likely given Iraq is funding peshmerga to fight ISIS?
8.25am GMT
The Wall Street Journal has created an excellent graphic, showing how Opec has created the current oil glut by pumping harder, while US shale producers have cut back:
The member countries were faced with a “very deep” abyss of low oil prices, and that won out over politics, said Daniel Yergin, vice chairman of IHS Markit and a longtime oil-market watcher. “OPEC is back in business,” Mr. Yergin said in an interview. “This will rank as one of their historic decisions.”
Saudi Arabia and Iran, whose differences blocked a deal that aimed to freeze production earlier this year, made the deal possible by coming to a tortured compromise on production figures. Iran was allowed to increase its production by 90,000 barrels a day, a significant victory for the Islamic Republic as it tries to rebuild its economy after the end of Western sanctions.
8.17am GMT
Shares in energy companies are jumping today too.
In London, Royal Dutch Shell and BP are leading the risers on the FTSE 100; a higher oil price should mean higher profits.
Long-term apprehension surrounding the deal (and the potential for a pick-up in US shale production) will be thrown to the back of investors’ minds as Brent regains a $52 handle and US Crude fast approaches $50 per barrel. How long can the post-deal rally last?
7.55am GMT
Opec’s deal is bad news for motorists, as higher crude prices will swiftly lead to more expensive petrol.
The front page of today’s Times declares that it could mean a litre of fuel costs 10p more, which swiftly adds up:
Motorists face paying £5 more to fill up an average family car after a Saudi-led cartel struck a rare deal to boost the price of oil.
Oil prices jumped by 8.9 per cent to $50.45 a barrel yesterday after the Organisation of the Petroleum Exporting Countries (Opec), which pumps a third of the world’s oil, agreed to limit output for the first time in eight years.
Thursday's Times front page:
Motorists will be hit by sharp rise in fuel prices#tomorrowspaperstoday #bbcpapers pic.twitter.com/tCBHOXoDaa
7.51am GMT
Brent crude jumps above $52/bbl as OPEC in first joint #oil cut with #Russia since 2001, Saudis take 'big hit' https://t.co/XVQljHYRWy pic.twitter.com/zYf5wXyHV9
7.46am GMT
The oil price has extended its gains this morning as the financial markets continue to digest Opec’s output cut deal.
US crude oil smashed through $50 per barrel for the first time in a month this morning.
The oil rally is holding, after OPEC agreed first output cuts in 8 years https://t.co/3ukQpYGU89 pic.twitter.com/NL1WQKIb2X
The consensus was that we would get some sort of loose agreement from the collective that kept oil supported, but left the market asking many more questions.
What we have seen however has been real meat on the bone, not just from gaining an understanding around production cut allocations from the more tricky OPEC members, including Iran and Iraq, but it seems Russia was so enthused by what they heard that they have increased their own production cut levels from 200,000 to 250,000 to 300,000 a day through the first half in 2017.
7.40am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Related: Oil price surges as Opec agrees first cut in output since 2008
Good #China morning! Could China become its old self again? The November Manufacturing #PMI matched the highest level since April 2012. pic.twitter.com/dYHB9pqZBf
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