Financial market research and analysis

The Dow and the S&P closed down after a volatile session; failing to recover steep losses from earlier in the week, as crude oil registered its worst daily decline in over 3 years. Energy was the worst performing sector. Apple staged a move higher in early trade, although it lacked momentum and was back in the red by the close.

Whilst crude oil traded flat overnight, Brent was lower again in early trade this morning, after plunging close to 7% in the previous session. 12 losing sessions in 13, resulting in over 25% declines, have prompted OPEC to cut supplies amid record output of US crude. The oil market had been building itself up for the Iranian sanctions, which were then waivered at the 11th hour, playing havoc with supply levels. As outsize stockpiles build, Saudi Arabia is desperate to put a floor under this with cuts, yet the market has as good as ignored this so far. Whilst the nature of the oil market is boom and bust, the scale and speed of this recent bust is enough to make even seasoned traders question their next move.

Mixed Session in Asia Despite Trade Talk Optimism

After the bloodbath in energy stocks on Wall Street, Asian markets put in a mixed performance, owing to trade talk optimism. Communications between the two powers are at all levels of government, with trade in focus, ahead of the G20. Despite the developments, Chinese stocks fell as data showed that Chinese financial conditions weakened in October by more than analysts had been anticipating, with fiscal revenue falling for the first time in 2018.

European bourses are set to follow the negative trend with a lower open. With base metal prices and Brent in the red and volatility expected in the pound, the FTSE could be in for a tough session.

Judgement Day for Theresa May

After gruelling negotiations, a draft Brexit deal has been agreed between the EU and the UK. Theresa May will hold a crunch cabinet meeting at 14:00 on Wednesday. Here she will attempt to draw her divided cabinet behind her and the Brexit deal that she has negotiated with the EU.

The pound is aware of the size of the challenge that Theresa May faces. Whilst sterling rallied to $1.3047 in the previous session on the news of the deal text; noticeably it closed below the important $1.30 level. This reflects the unease of pound traders as Theresa May faces judgement day. Hardline Eurosceptics are calling it Brexit in name only, so we can assume that there will be resignations over this. Whilst hardline Brexiteer Jacob Rees-Mogg has stated that he won’t challenge Theresa May’s leadership over the next 24 hours, he has by no means ruled it out going forward.

UK CPI to 2.5%?

After closing below $1.30, the pound is trading cautiously higher in what we expect to be a jittery session. The pound will be at the surrender of headlines as they roll in ahead of the crunch cabinet meeting. Prior to the meeting, investors will quickly glance towards inflation figures. CPI is expected to show that prices increased 2.5% in October, up from 2.4% the previous month. A strong reading could offer support to the pound in what we expect will be a roller coaster session.