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Appetite in oil is fading given the looming uncertainties on how to deal with Iran and Iraq’s request to be exempt from a production cut, and how would the other OPEC members react to an eventual discharge.
Given the complexity of negotiations, the large pallet of idiosyncratic factors in play and severely squeezed finances, it would be a miracle if the OPEC members succeeded to seal a deal for a satisfactory output cut at the November 30th meeting in Vienna. If however an agreement is reached, the barrel of oil is expected to recover to $55 by the end of the year.
The US dollar softened against the majority of its G10 counterparts, except the pound and the Norwegian krone. Due today, the FOMC minutes from November's meeting are expected to trigger little enthusiasm given that the market already assesses a 100% probability for a Federal Reserve (Fed) interest rate hike in December.
Commodities gained on the back of a softer US dollar. Iron ore futures soared 7.33%, zinc rose 0.81%, as copper gained 0.26%.
FTSE started the day slightly upbeat; basic materials (+1.42%) lead gains. Banks and insurers started behind the curve, while appetite in UK homebuilders remained limited before the UK’s Autumn Statement due later today.
Taylor Wimpey (+0.33%)
The pound is under decent selling pressure heading into the Autumn Statement.
Today’s statement will be Philip Hammond’s debut as Chancellor, and the first since Theresa May became Prime Minister after June’s Brexit referendum.
The new Chancellor is expected to reveal the cost of the Brexit and the impact that it would have on public finances.
Hammond is given the hard task of supporting the UK's economy after it decided to leave the European Union. On today’s menu are the possibilities of an increase in the national living wage to £7.50, slowing benefits for new workers, prospects of an increase in housebuilding, and potential restrictions on agent fees. It is a sure thing that higher spending should increase jobs, generate revenue and steer economic activity away from a severe recession. Yet the UK government doesn’t have bottomless funding.
According to a recent Bloomberg survey, the UK government would borrow an additional £100 billion, given that slower post-Brexit growth would hammer tax revenues. Based on this consensus, the UK’s budget deficit would run at £30 billion, instead of turning positive by 2020, as promised by the pre-Brexit Chancellor George Osborne.
Hammond has already warned that the UK's “eye-wateringly large debt” would give him little room for manoeuvre.
Whilst risk sentiment has been healthy across the week, this swelling optimism boosted US stock markets to an all-time high overnight. A rally in tech stocks, which have done a lot of lifting for the indices over the year, in addition to fading concerns over U…Read more
Despite a shaky end to trading on Wall Street overnight, which saw the Dow gain 0.6%, the S&P just 0.1% and the Nasdaq slip by the same, Asian markets moved broadly higher on improved sentiment. European bourses are taking the lead from the US over Asia, w…Read more
Asian markets took the lead from Wall Street overnight, rallying as the latest tit for tat measures in the escalating trade spat have not been quite as severe as the markets had been expecting. Tech stocks were also heavily in demand, bouncing back after steep…Read more
Traders are faced with a sea of red in risk-off trading as markets are set to open on Tuesday. Despite the fact the market has been expecting an escalation in trade tensions between the world’s two largest economies with further tariffs from Trump; the reality…Read more
Escalating trade tensions will once again be a central theme to driving sentiment and trading this week, with President Trump widely expected to levy tariffs on a further $200 billion worth of Chinese imports, potentially as soon as today. The elevated trade c…Read more
European bourses are set to take the lead from a positive session on Wall Street and Asia overnight. A drive higher from tech stocks on Wall Street helped lift Asian equities after their recent battering, pulling them off 2-year lows.
Asian markets were endin…Read more
Today will be a busy day for traders with 2 central bank rate decisions and US inflation data all due for release within a few hours of each other. The BoE monetary policy announcement will kick things off, followed shortly after by the ECB rate announcement a…Read more
Wall Street traded higher overnight shrugging off trade tensions, amid rallying tech stocks led by Apple and a 2% gain in oil prices. Meanwhile, Europe is looking to take the lead from the US with European bourses broadly looking to start the session on the fr…Read more