The FTSE started the post-holiday week on a high as oil majors rallied in response to higher oil prices. However, airline stocks are under pressure as news unfolds that French pilots may walk out in protest in May over a change in legislation. The strike has the potential to disrupt Air France (LON:0LN7) and EasyJet (LON:EZJ) flights to and from France in May and comes at a time when airlines are beginning to feel the pinch of higher oil prices.
Correction in Chinese stock markets
Now that some of China’s domestic economic indicators are showing that the country is in a better shape than expected, fears are rising that the Chinese government might tighten up on the financial support provided this year and cause the stock markets to tumble.
The country’s policymakers said they would tweak monetary policy so it was neither too tight nor too loose, sending China’s main stock markets into a downward spiral. Some of the correction was probably overdue as the country’s blue chips have rallied over 30% since the beginning of the year on expectations that the stimulus would keep the economy growing, but it will now be a case of watching developments closely to see if the stock market can sustain growth, albeit at a slower pace.
Oil at 2019 high
Oil prices hit their highest level this year after the US decided to tighten sanctions on Iran and cancel all the waivers for countries still buying oil from the Middle Eastern country. The waivers currently held by China, India, South Korea, Japan and Turkey are due to expire in May and will not be renewed when they do.
Global oil supplies are already tighter than usual because of a gradual reduction in output introduced by OPEC countries since last December and exacerbated by disruptions in Venezuela, Nigeria and Libya, which means that any additional slowdown in the inflow of oil is will be felt relatively quickly.
London-traded Brent crude is up 0.58% this morning at $74.48.
Sterling drifts below $1.3
Now that the Easter holiday is over political heat is expected to start building again and to begin putting sterling under renewed pressure. Newspapers are filling up with headlines about parts of the Conservative Party preparing to ask once more for Theresa May’s resignation but irrespective of whether Mrs May remains in power or not, the deeper problem of the country not having a clear Brexit blueprint remains in place.
The pound is showing a distinct lack of optimism, having slipped over the last few days below the $1.300 threshold which once was the “no-deal” Brexit marker. It is also marginally stronger against the euro, recovering from a dip to EUR 1.526 on Easter Monday.
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