European stocks bounce back on Shell 8217 s earnings and dollar weakness

European stocks recovered somewhat from the previous day of losses as investors hunted energy firms buoyed by better than expected results from oil giant Royal Dutch Shell, whilst a weak dollar has lifted the miners.

What we have seen generally is investors willing to buy form the lows unless the FTSE 100 endures a break below the 5600 level, which could inflict a change of attitudes. Yesterday we saw buying re-emerge around the 5635 level and it seems this, along with Shell’s numbers and the weak dollar have been enough to lift the FTSE 100 around 0.7%.

There have been uncertainty of late as to the scale of quantitative easing set to be announced by the Fed next week and this has convinced investors to cash in their profits, forcing Indices down over the last few sessions. This uncertainty has not disappeared overnight however and as such today’s rally could be more about bargain hunting than any large refocus towards ones appetite for risky asset classes.

Shell’s earnings delight
Earnings from Royal Dutch Shell have delighted the market today after the oil giant beat expectations to record an 18% jump in third quarter profits. Much of the increase has been dictated by higher oil and gas prices and this has lifted optimism that its peers in the sector could be set to benefit also. Shells results add to the positive tone already set from US peer ConocoPhillips who announced that their profits had doubled last night. As a result, energy firms have helped to support Indices across Europe today. Traders will keep a firm eye out for earnings from the world’s leading oil firm Exxon Mobil which are due out this afternoon. A bullish set of results from them and this could increase demand for those energy firms yet to report.

Miners lifted by weak dollar
The weak dollar trend seems to have resumed today, helping to lift commodity prices and as such the key miners in Europe. There is a strong inverse relationship between the US dollar and Indices of late and with the Dollar Index lower by 0.5% today, it firmly locks in a positive session for European equities.