Market round-up: FTSE on track for first weekly gain of 2016 as oil prices rebound

UK and European markets rallied on Friday (22 January) following their Asian counterparts firmly into positive territory as commodity-related stocks surged on the back a solid rebound in oil prices. Midway through the session, London's FTSE 100 was up 2.17% and remained on track to post its first weekly gain of the year, while Germany's Dax and France's CAC 40 were 2.04% and 3.24% higher respectively, while the Pan European Stoxx 600 index gained 2.78%.

On Thursday (21 January), equities received a much-needed boost after the European Central Bank opted to keep interest rates unchanged at 0.05%, while Mario Draghi hinted more stimulus measures could be introduced in the short-term future.

"Expectations are now rampant that further stimulus will arrive in March so we're witnessing some front running amongst risk assets the morning," said London Capital Group's analyst Ipek Ozkardeskaya. "Draghi may well go down in history as the central banker with the most influence and indeed credibility."

Oil prices surged ahead, with Brent crude jumping 5.28% to $30.88 (£21.62, €28.46), while West Texas Intermediate gained 4.43% to $30.90 a barrel.

"Equity markets no longer appear to be following the 'buy the dip' template, but are of late more inclined to 'sell the bounce', yet given the size of this recent move higher, both the bulls and bears will be looking for any change in sentiment," said Alastair McCaig, market analyst at IG.

"Oil traders continue to pay close attention to Chinese president Xi's road trip as he has now moved from Saudi Arabia onto Iran, especially as it is the world's largest consumer of oil."

As a result, a number of commodity-related stocks were firmly on the front foot in London, with Antofagasta, BHP Billiton , Royal Dutch Shell and BG Group all rising between 3.9% and 7.8%.

Elsewhere, Asian equity markets jumped in the final session of the week, as they too benefited from Draghi's comments. The Shanghai Composite Index gained 1.25%, while Hong Kong's Hang Seng and Japan's Nikkei 225 surged 2.90% and 5.88% respectively, the latter clinching the biggest daily percentage gain since 9 September 2015.

However, news was not as positive on the macroeconomic front, as figures released by the Office for National Statistics showed UK retail sales suffered their biggest monthly drop in over a year in December 2015. According to the ONS, annual sales rose 4.6%, the most since 2004, while in December 2015 retail sales rose 2.6% year-on-year, compared with a 3.9% rise in November and analysts' forecast for a 3.5% gain.

On a month-on-month basis, retail sales fell 1%, the largest monthly decline since September 2014, compared with analysts' expectations for a 0.3% decline and a downwardly revised 1.73% advance in the previous month.

European investors, meanwhile, were untroubled by the release of a number of disappointing economic reports that showed the manufacturing and services sectors in the Eurozone were under pressure in January.