Amid a lack of catalysts, stocks across Europe and the US drifted lower. The FTSE fell less than its peers, thanks to outperformance by heavyweight oil majors, tracing the price of oil higher.
Crude strikes 2019 high
Oil surged 2% across Monday hitting a fresh high for 2019 amid concerns that supply will tighten further. Oil supply has been tightening across the year amid continued production cuts from OPEC, and sanction on Iran and Venezuela.
The conflict in Libya escalating over the weekend has prompted fears that oil production in the region will be affected. This overshadowed the largest increase in active US rigs since May. Meanwhile, the demand side of the oil equation has been taking a back seat recently. Friday’s rebounding NFP report has boosted optimism that demand will remain supported.
Crude oil rallied to a 5-month peak of $64.39 and has since eased off its highs. Oil looks well supported by fundamentals at these levels. OPEC would need to put its foot back on the production pedal in order for the price of oil to pull back significantly. The next OPEC meeting is not until June. However, if the price of oil rises too much further, investors could start to speculate that OPEC will vote to ramp up production once again, putting pressure on the price of the black stuff.
S&P 500 snaps 7-day winning streak
Wall Street’s rally showed signs of stalling at the start of the new week. The S&P snapped a 7 day winning streak on Monday, after coming with 1.5% of reclaiming it’s all time high. US – Sino trade talks ended last week.
Despite both sides hailing the talks a success, there is no timetable in place for an agreement. In short, the markets still have nothing solid to sink their teeth into. Instead company news dominated with Boeing (NYSE:BA) experiencing heavy declines amid the continued fallout from 737 airplane issues.
Brexit update
The pound gave up earlier gains and was hovering around the flatline heading to the end of the European session. With just 4 days to go, pound traders certainly don’t seem fazed by the Brexit clock ticking down.
Theresa May has made a compromise offer to Labour’s Jeremy Corbyn. However, it falls short of meeting Labour’s key demands. Whilst talks continue with the leader of the opposition party Theresa May will also try to convince the EU that she only needs a short extension to get a deal over the line. It remains unclear whether the EU will agree to a short extension. Other the Bret can will be kicked another 9 -12 months down the road.
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