Europe
European markets spent most of the day on the back foot yesterday, weighed down by concerns about the ability of OPEC members to come to an agreement this Wednesday, though they managed to recover off their lowest levels of the day.
They were helped in this by oil prices, which while initially trending lower in the morning session did manage to recover strongly in the afternoon session after comments from the Iraqi oil minister that expressed optimism about the prospects of a deal, but that still hasn’t been enough to pull the oil and gas sector back into positive territory on the day.
A slide in Italian banking shares also weighed on sentiment as investors pared back exposure to the sector ahead of this weekend’s Italian referendum, while bond markets started to show some signs of recovering some ground, as yields fell back.
The slide in yields along with concerns about a potential banking spill over from Italy has prompted weakness in UK banks ahead of this week’s Bank of England stress test results, with Royal Bank of Scotland Group PLC (LON:RBS) and Lloyds (LON:LLOY) both lower.
The weakness in oil prices over the last couple of days appears to be tempering inflation expectations and the rebound in bond markets appears to be reflecting this.
Retail stocks are also on the slide as the Cyber Monday sales got under way here as well as across the pond in the US.
On the plus side, utility stocks had a decent day with Centrica (LON:CNA), SSE (LON:SSE) and United Utilities Group (LON:UU) all doing well, while a stabilisation in gold and silver prices helped underpin mining stocks Randgold Resources (LON:RRS) and Fresnillo (LON:FRES), while Russian gold producer Polymetal (LON:POLYP) was also higher as it seeks to defer relegation back to the FTSE 250 after one quarter back in the top index.
US
US markets opened the new week slightly lower after last week’s record highs, as we come closer to the end of what has been a record breaking month. Some light profit taking appeared to be the order of the day, as concerns over this week’s OPEC meeting weigh on sentiment.
With Cyber Monday getting underway the retail sector will once again be in focus with Amazon (NASDAQ:AMZN), Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) likely to be the centre of attention when they release their weekend sales numbers.
Boeing (NYSE:BA) shares are also likely to come under scrutiny on speculation it could be subject to WTO sanctions over allegations it received illegal state aid from local authorities in Washington State.
FX
The US dollar had a rather mixed day dropping sharply against the yen, but gaining ground against the pound, while the Canadian dollarwas pulled around by the movement in the oil price.
The pound had a disappointing day despite the OECD revising its growth forecast for the UK economy slightly higher, though it still remains at the lower end of expectations and behind its EU and US peers. It still managed to post a three week high just prior to yesterday morning’s sell-off.
Commodities
Crude oil prices had a topsy-turvy day sharply lower initially in the morning before recovering after comments from the Iraqi oil minister that expressed optimism about the prospects of a deal, later this week.
While these sorts of comments are par for the course they still have the capacity to move the market despite the widespread cynicism they usually generate. It still seems unlikely that the various protagonists will be able to arrive at a significant deal but markets are still wary in the event of an unexpected surprise.
Copper prices also appear to be struggling to make any further progress from the recent highs we saw last week.
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