OPEC Strikes A Deal

Improved sentiment over international trade war fears has enabled investors to focus their attention elsewhere on Friday, helping to lift markets in Europe and the US. The FTSE has surged over 1.5% higher, leading the charge ahead of its European counter parts and dragging into the black across the week after trade and rate concerns weighed on the index earlier in the week.

The heavy weight oil sector traced oil prices higher, lifting the FTSE, on news that OPEC plus Russia had secured a deal on raising output levels. 

Whilst the oil cartel managed to pull Iran on side and agreed to raise oil production by 1 million barrels per day, the reality is that the increase will be significantly less given that some countries will struggle to ramp up production and other production. WTI is currently trading 3.7% higher, whilst Brent is up 2.3%.

There are two principal points boosting the oil market, first, fact that the group has manged to strike a deal has removed an element of uncertainty allowing oil prices to rally. 

Second, the production increase is within what traders considers to be a range which won’t swamp the market. However, the announcement has been noticeably short on detail, which could raise its head as a risk in the not so distance future.

Trump threatens EU with more tariffs

It was unlikely that Trump was going to stay quiet today, as the EU initiated tariffs on €2.8 billion of US imports. 

Whilst writing this report, Trump has threatened placing 20% tariffs on EU car imports into the EU in yet another very clear sign that Trump has no intention of preventing tit for tat measures turning into a full-blown trade war. 

Following the announcement, the Dax which had been trading 0.2% higher on the day, spiked lower before continuing to progress higher. The euro has also been unaffected by the announcement as it remains 0.3% higher on the day versus the dollar.

Eurozone PMI impresses

PMI data from the eurozone has gone some way to supporting the common currency. Concerns over eurozone economic growth losing momentum have been rife over the past few months and the PMI’s have been gradually dropping lower. June’s figures panted an improving picture with the composite PMI surprising to the upside.

Wall Street has kicked off trading on the front foot, snapping an eight day losing streak on the Dow. Energy stocks are expected to keep the indices afloat, even as trade concerns start to raise their head once more.