After an initial flurry higher the European markets were dragged lower on Monday, the unavoidable fact of oil’s continued decline especially hurting the FTSE.
With demand collapsing, Brent Crude tumbled a further 6.6% as the week got underway, taking the black stuff to $23.20 per barrel. Forcing BP (LON:BP) and Shell (LON:RDSa) down more than 3% apiece, this in turn wiped another 90 points off the UK index, leaving it scrabbling to keep above 5400 – a rough mid-point between last week’s highs and lows.
The FTSE’s losses came despite the pound’s own decline. Cable dropped 0.9% to hit $1.2357 – though that does keep the brunt of last week’s remarkable rebound intact – while against the euro sterling drifted half a percent lower.
The situation was much the same in the Eurozone. The DAX lost 0.8% as it slipped back under 9550, with the CAC down 1.5% as it fell below 4300.
Europe likely would have seen a tougher time of it if it wasn’t for a bump of Chinese stimulus. The People’s Bank of China cut its 7-day reverse repo rate – which covers short-term loans – from 2.4% to 2.2%. That’s the largest cut in half a decade.
Monday is a rather dull one if you’re looking at the economic calendar. However, the markets sit on the precipice of another intense week of data. Last week they survived some rough numbers thanks to various stimulus measures, especially from the US. This time out, however, there is no guarantee of that happening, with a run of Chinese manufacturing and services readings and a wave of final March PMIs from around the world culminating with Friday’s nonfarm jobs report. And if last Thursday’s unemployment claims number is anything to go by, it could be a big one.
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