The FTSE snoozed its way through Thursday’s session, trading a tight range of just over 20 points.
With the US closed for Independence Day and no noteworthy releases on the economic docket, traders have had very little to sink their teeth into. The tranquillity is unlikely to last, with tomorrow’s non-farm payroll almost bound to inject volatility back into the markets.
Italian FTSE Mib hits 1 year high
Over on mainland Europe Italy’s FTSE MIB was the only index showing any real signs of life. The Italian benchmark soared across the session, boosted by its banking sector. Italian banking stocks were firmly in favour after the Italian government convinced the European Commission that the new measures that it submitted this week will help to bring its growing debt in line with fiscal rules.
A relief rally on the back of Italy avoiding disciplinary action over the state of its public finances has lifted the banking sector 3%, taking FTSE MIB into the 1-year high club.
The 3% rally for the sector comes following a 5% gain in the previous session, as among other factors, investors reacted to Christine Lagarde taking the helm at the ECB.
Christine Lagarde is seen as the continuation candidate following Mario Draghi and is expected to adopt an accommodative stance to monetary policy. Her appointment removes the risk of a known hawk stepping in.
Whilst this is all good new for now, Italian troubles will almost certainly resurface in Autumn 2020 when the draft budget must be submitted.
Oil drops 0.8%
Oil slipped lower Thursday following a smaller than forecast draw-down and on rising concerns over the health of the global economy. Following an almost 2% rally in the previous session, investors were questioning their bullishness.
EIA reported weekly declines of 1.1 million in crude stocks, versus the 3 million draw down forecast and the 5 million barrels reported the previous day by the API.
US refineries consumed less oil crude than the previous week and 2% less than a year ago, despite summer being a traditionally strong season for demand. The most obvious reason for this is slowing demand in the US, which would tie into the weakening US economy story, particularly after data showed that US factory order slumped -0.7% in May.
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