European Market Open: Brexit talks to go down to the wire

European stocks are set to open lower on Tuesday as Brexit negotiations failed to deliver a breakthrough yesterday.

Charts (2)

Brexit talks intensify ahead of EU’s new deadline

UK prime minister Boris Johnson and European Commission president Ursala von der Leyen spoke for 90 minutes by phone last night and concluded that there has not been enough movement on the three major sticking points – fisheries, governance and the level playing field – to strike a deal.

Talks will intensify as both leaders intend to meet in Brussels in the coming days, pushing talks into later this week. The EU’s chief negotiator Michel Barnier has set Wednesday as a new deadline so any agreement can be presented to member states during the two-day European Council meeting that starts on Thursday. However, a spokesman for the prime minister said Johnson does not accept the deadline, stating ‘we are prepared to negotiate for as long as we have time available if we think an agreement is still possible’.

UK prepares to deliver first doses of COVID-19 vaccine

People in the UK will start to receive their first doses of a COVID-19 vaccine developed by Pfizer and BioNTech on Tuesday. Doses have been delivered to 50 hospital hubs around the country and front-line health staff, care home workers and those over 80 years old are at the front of the queue.

While it is a landmark day in the fight against COVID-19, we are still some way from ending the pandemic and it is only the beginning of what will be the biggest vaccination programme in the country’s history.

FTSE 100 to open lower

The FTSE 100 is set to open at 6528.3, down 0.5% from 6559.0 at the close on Monday, when it ended in slightly positive territory.  

UK retail sales growth slowed in November

The British Retail Consortium released retail spending figures late last night, showing total retail sales grew by 0.9% in November, considerably slower than the 4.9% growth reported in October. On a more positive note, like-for-like sales were up 7.7% compared to a year earlier.

Breaking down the data, some sectors have performed much better than others. Supermarkets and food sales have soared while spending in hospitality venues has plummeted thanks to lockdown.

Ashtead posts drop in demand

Ashtead, which rents out tools and equipment, said revenue was broadly flat in the second quarter but that pretax profit fell 8%. For the first half, Ashtead posted a 4% drop in revenue to £2.29 billion and a 21% fall in pretax profit to £538 million. The company maintained its interim dividend and said it expects to beat full-year expectations.

Ferguson posts revenue growth in first-quarter

Plumbing and heating products company Ferguson said revenue rose 3.1% in the three months to the end of October, helping lift trading profit by 12% to $504 million. The firm said its expectations for the full-year remain unchanged.

Redde Northgate posts rise in revenue and profit

Commercial vehicle hire company Redde Northgate said revenue in the first-half rose 55% to £556 million, helping lift pretax profit by 4.3% to £25.9 million. The company declared a dividend of 3.4 pence for the period, although that is down 46% from the 6.3p payout the year before.

Rio Tinto could face fine for destroying ancient rock shelters

Reuters reported this morning that mining giant Rio Tinto could face calls to pay compensation or a fine when an Australian parliamentary inquiry releases an interim report on Wednesday about the company’s illegal destruction of ancient rock shelters whilst building an iron ore mine in the country.

European indices called to open lower

While Brexit talks rumble on, European markets will be responding to Eurozone data being released at 1000 GMT, including GDP, employment change and ZEW survey on economic sentiment. That comes ahead of the European Central Bank’s interest rate decision this Thursday. 

The Euro STOXX Index is set to open 0.2% lower at 3520.5. The index, which tracks the performance of 50 of Europe’s largest stocks, closed at 3528.5 on Monday.

Germany’s DAX is set to open 0.2% lower at 13244.0, having closed at 13264.5 yesterday.

France’s CAC 40 is called to open 0.3% lower at 5552.3 after ending yesterday’s trading session at 5570.8.

Find out more about trading indices here.

Deutsche Bank, Citigroup and ANZ face trial over criminal cartel case

Deutsche Bank, Citigroup and Australia and New Zealand Banking Group were committed to stand trial in Australia on Tuesday after pleading not guilty to collusion during a share issue. It is the country’s biggest white collar crime case looking into a AUD2.5 billion stock issue by ANZ two years ago.

Forex: Pressure remains on pound

The pound took a battering on Monday due to the limited progress being made in Brexit talks, shedding more than 1% against both the euro and the dollar. It also weakened against other currencies including the yen and the Australian dollar.

GBP/USD trades at 1.33473, dipping 0.1% from 1.33582 at yesterday’s close.

EUR/GBP trades at 0.90762, having shed 0.2% from 0.90907 at Monday’s close.  

The euro is in the spotlight today ahead of GDP data being released at 1000 GMT. Usually, rising GDP has a positive effect on the euro, while a falling trend is seen as negative. Notably, the euro has strengthened 8% against the dollar and 6.7% versus the pound since the start of the year, making EU goods more expensive, and this is one concern for the ECB ahead of its meeting on Thursday.

EUR/USD is at 1.21143 this morning, 0.2% lower than 1.21385 when UK markets closed yesterday.

Find out more about trading forex here.

Commodities: Gold hits two-week high as oil prices slide

Gold trades at $1868.4 per ounce this morning, strengthening from $1,864.4 at the close of trade on Monday. The safe-haven had been losing steam since positive news about a COVID-19 vaccine saw the market’s appetite for riskier assets increase, but the metal is currently trading at its highest level in two weeks.

Find out how to trade gold and other precious metals here.

Brent trades at $48.33 this morning, sliding 1.7% from $49.17 when UK markets closed yesterday. Last week, prices hit their highest level since March, buoyed by an agreement between OPEC and Russia to address fears of over-supply, as well as the softness in the dollar. However, rising coronavirus cases have come back into play and weighed on prospects for future demand. Reuters reports this morning that OPEC and Russia are likely to hold their next policy meeting on January 4, citing sources.

WTI is trading at $45.43, also 1.7% lower than $46.21 at the close of UK trade yesterday. US API weekly crude oil stocks, which indicates the country’s level of demand for oil, will be released at 2130 GMT.

Find out more about trading the volatility in oil here.

Tuesday’s economic calendar

The key event in Tuesday’s economic calendar is European data being released at 1000 GMT. Attention turns to the US in the afternoon, with unit labor costs and non-farm productivity due at 1330 GMT.

Find out what will happen later this week using our Economic Calendar, and keep up to date with the latest market news and analysis here.

Time (GMT)

Country

Event

0800

Hungary

Core Consumer Price Index for Nov (YoY)

0800

Hungary

Consumer Price Index for Nov (YoY)

0800

Czech Republic

Foreign Trade Balance for Oct (MoM)

0800

Czech Republic

Industrial Production for Oct (YoY)

0900

Italy

Industrial Output S.A for Oct (MoM)

0930

South Africa

Gross Domestic Product for Q3 (QoQ and YoY)

0930

UK

FPC Meeting Minutes

1000

Germany

ZEW Survey - Current Situation for Dec

1000

Germany

ZEW Survey - Economic Sentiment for Dec

1000

European Monetary Union

Gross Domestic Product for Q3 (QoQ and YoY)

1000

European Monetary Union

ZEW Survey - Economic Sentiment for Dec

1000

European Monetary Union

Employment Change for Q3 (QoQ and YoY)

1100

US

NFIB Business Optimism Index for Nov

1200

Brazil

IPCA Inflation for Nov

1330

US

Unit Labor Costs for Q3

1330

US

Non-Farm Productivity for Q3

1355

US

Redbook Index for Dec 4 (MoM and YoY)

1800

US

3-Year Note Auction

2130

US

API Weekly Crude Oil Stock for Dec 4

2145

New Zealand

Manufacturing Sales for Q3

2330

New Zealand

Westpac Consumer Confidence for Dec

2350

Japan

Machinery Orders for Oct (MoM and YoY)



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