Concerns over US markets keep pressure up on European stocks
Fiona Cincotta December 5, 2018 6:00 PM
European indexes are mostly lower with the notable exception of Milan’s FTSE MIB as the shock waves from the sharp drop on Wall Street Tuesday continue to reverberate across European markets.
European indexes are mostly lower with the notable exception of Milan’s FTSE MIB as the shock waves from the sharp drop on Wall Street Tuesday continue to reverberate across European markets. Concerns over global trade are back on the agenda as the fine print on the recent US China deal became apparent, that is that the deal is only valid for the next three months. US markets are mostly closed for George Bush Senior’s day of mourning although there is still some electronic trade taking place in futures, options and in commodities.
The FTSE has spent the day seesawing up and down with solid gains from house builders – Berkley Group up 7.06%, Persimmon up 6.79% and Barratt Developments trading 5.83% higher - not enough to offset the general malaise across a multitude of other industries however.
Canadian dollar plunges as oil revenue affects economy
Canada’s central bank inadvertently knocked down the Canadian dollar with a warning that the country’s economy will be affected by the recent drop in oil prices. For the best part of the last six months WTI crude prices traded in a narrow range between $66 and $74, but since the beginning of October they have declined almost without a respite to around $54. Most of the Canadian oil is exported to the US and Canada’s economic well being is closely linked with the health of the US oil demand. The country’s currency declined almost 1% following the bank’s comment.
Sterling bounces on hopes of no Brexit
Meanwhile sterling pushed higher against the euro and the pound, up from a 17-month low hit Tuesday, as the market started talking itself into a no-Brexit scenario. But while it has become fairly clear that the likelihood of Parliament approving PM Theresa May’s Brexit proposal next Tuesday is fairly low, it is far from clear what will follow. As politicians of both lead parties remain deeply divided about which way the country should go, the most likely outcome seems to be more uncertainty and market volatility because a rejected vote would give parliamentarians three more weeks to decide on the next course of action.
Oil prices recover as OPEC gets ready to meet
Crude oil is nudging higher ahead of the oil cartel OPEC’s meeting in Vienna Thursday as markets are pricing in that Russia and Saudi Arabia will start reducing output as per an agreement reached by the countries’ heads of state last weekend. It remains to be seen if OPEC will follow suit but the price action implies that investors are paying far less heed to what the rest of the cartel will do now that the two top producers seem to have committed to cuts. A word to the wise: though Russia and Saudi came to a general agreement neither country specified by how much they would cut output or by when. Maybe the OPEC meeting will shed some light after all.
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