The UK Index ’s Miners are holding the UK flagship index back from a more meaningful test of 6900 support this morning. This is thanks to a weaker USD (expectations of further US rate rise delay), some positive Services data from China and India overnight and hopes that the G20 meeting in China serves to at least support global growth and pressure the UK into a soft-Brexit that preserves existing trade relations. We note Copper and Iron Ore holding up above recent lows (still in an August downtrends), the precious safehaven metals rallying after breakouts, Zinc powering on towards a full retrace of last year’s declines and Nickel bouncing.

This is all positive, however, it looks to be an oil price spike that is really helping sector sentiment and of course the UK Index Heavyweight OiI majors. The driver for the spike remains unclear, but optimism of proper cooperation between Russia and Saudi Arabia may be gaining traction to offset global glut fears ahead of this month’s much hyped unofficial OPEC-led production freeze meeting in Algeria.

We’ve been here before though, in the run-up to such a meeting. Remember earlier this year? Expect plenty of warm-up chat from everyone involved that moves the price of a barrel via hopes and fears, excitement and panic. Iran remains a potential spanner that could yet throw itself into the works. It’s between a rock and a hard place, needing to appear on-board with the talks whilst simultaneously insisting on having the right to further increase output post sanctions. All the while not wanting to dent prices for everyone. Not an easy balance to strike.

Mike van Dulken, Head of Research, 5 September