Buy Oil? Bye Twitter?

Hillary Clinton’s ‘win’ in the second US presidential debate set the tone for global stocks as we got the week underway. But while stocks in Asia were mixed, stocks closer to home and across the Atlantic made substantial gains. But while the better geo-political sentiment was in itself a positive factor, the market limelight was stolen by none other than Vladimir Putin. In remarks to the press at the World Energy Congress in Istanbul, Putin said:

“Russia is ready to join in joint measures to limit output and calls on other oil exporters to do the same. In the current situation, we think that a freeze or even a cut in oil production is probably the only proper decision to preserve stability in the global energy market.”

It’s worth pointing out the Russia is pumping oil at record post-Soviet levels, so a freeze doesn’t really address the problem since current supply is already exceeding current demand. Nonetheless, oil seemingly had nowhere to go but up on the news, and rose more than 3% to over $51 a barrel. The statement comes on the back of a semi-formal commitment by OPEC countries to cut back on output later this year. The formal details of this deal still have to be hammered out on the 30th of November, but a history of failed deals may keep the market on the sidelines before the deal is inked.

Energy companies were the main beneficiaries of the day’s price action, especially in the UK were shares closed just shy of an all-time record. Shell and BP rose 2.8% and 1.7% respectively, and Antofagasta, BHP Billiton and Rio Tinto also chalked up gains in excess of 2%. UK equities have become the developed world’s best performers this year, aided by a recovery in commodity prices but also by currency gyrations.

In the UK, the stock market’s fortunes are inversely related to that of the British currency. Despite holding some ground against currencies such as the Euro and the Swiss Franc, the pound has generally dropped further today, as fears of a ‘hard Brexit’ persist. Last week, UK Prime Minister Theresa May indicated that she would prioritize immigration control over membership to the single market, a sentiment echoed by an aide to ‘Brexit minister’ David Davis.

Elsewhere in Europe, Thysenkrupp, E.ON, EDF and Total advanced. Financials were strong in Italy, outperforming all other sectors on the day. On the other end of the scale, EasyJet dropped to a 3-year low after a broker downgrade, and UK homebuilders and banks were also under pressure.

Across the pond, the big news is that for-sale-Twitter slumped more than 13% to a 2-month low, after reports that top potential bidders Salesforce, Google and Walt Disney were backing out and had lost interest in making a bid for the ailing social media company. News that Google and Walt Disney (and Apple) were losing interest had hit the wires last week – indeed Twitter lost 20% last Thursday and Friday alone. In contrast shares in Salesforce were up by more than 5%, as analysts’ and investors’ concerns about the potential deal were allayed.

Twitter has failed to gain traction since going public. Its user base has not grown significantly and it is struggling to generate significant income streams. At today’s prices, the company is worth just over $12 billion, That’s less than a quarter of what it was worth in its peak of December 2013, when it was valued at around $53 billion.