Stocks poised for next leg higher if oil drops
SPY•European shares looked set to finish the third quarter near where they started, while the STOXX 600 was down nearly 2% in September. Barclays strategists said positive fourth-quarter seasonality may support a rebound, but persistently high oil prices remain a risk; Brent was above $103 per barrel.
1. Oil remains a key risk
European shares looked set to close the third quarter almost where they began, after the STOXX 600 fell nearly 2% in September. Barclays strategists led by Emmanuel Cau said positive fourth-quarter seasonality and midterm dynamics typically argue for a rebound.
2. Crude prices in focus
Brent crude remained above $103 per barrel as energy supplies stayed severely disrupted. Cau wrote that a US-Iran breakthrough would materially boost stocks and bonds, and said the risk of higher-for-longer oil appeared more priced into bonds than equities. A sustained drop in oil could help clear the way for a year-end rally, while elevated prices remain a risk for stocks.
