Oil Dives Dragging FTSE Lower while Political Concerns In Europe Weigh

Whilst the FTSE jetted out of the starting blocks full of energy, gapping higher on the open, it was unable to maintain it strength, weighed down plummeting oil prices, and continued geopolitical concerns, which overshadowed a weaker pound. The FTSE closed just 11 points up on the day.

Whilst the FTSE jetted out of the starting blocks full of energy, gapping higher on the open, it was unable to maintain it strength, weighed down plummeting oil prices, and continued geopolitical concerns, which overshadowed a weaker pound. The FTSE closed just 11 points up on the day.

UK GDP weakest for 5 years

Previous support at $1.3305 held today as the pound tumbled following the latest GDP reading. The second reading of economic growth in the UK confirmed that growth in Q1 was an anaemic 0.1% quarter on quarter, its lowest in 5 years. Yet whilst the BoE has been vocally confident that the slowdown was due to extreme weather conditions, the Office of National Statistics are adamant that the Beast from the East had little impact. This discrepancy is hugely important as it is the difference between a recovery in the coming quarters or not. As a result, it has created yet more uncertainty for the already battered pound.

Euro to fresh YTD lows

The Euro extended losses to fresh 2018 lows amid political concerns and a possible down grade in growth forecasts by the ECB. Slowing momentum to economic growth in the bloc has been evident since the start of the year, and until now the ECB have remained upbeat. A faltering of confidence by the ECB has been quickly noted by the sensitive euro, putting the euro on track for its 6th straight losing week. The reported lowering of growth forecasts for the bloc also come at a time of political uncertainty with a Eurosceptic coalition taking the reins in Italy and a possible vote of no confidence expected in Spain.

OPEC to ease oil production cuts?

Oil was trading some 3% lower moving towards the weekend, putting oil on track for a loss across the week. This would put a halt to a six-week run of gains for oil, as it charged higher on reduced output expectations from Venezuela and Iran, in addition to the OPEC led supply cuts already in place. There has bee increasing doubts over the past few secessions as to how much longer OPEC and Russia will look to keep the production cuts in place. Today’s Saudi Arabia as good as confirming that OPEC will ease was music to the ears of oil bears. Both Brent and WTI. Brent is trading below $76.50, whilst WTI plunged close to 4% hitting a low of $67.92 per barrel. Unsurprisingly this has dragged oil majors to the lower reaches of the FTSE.


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