Europe
Once again the weakness in the pound is helping the FTSE 100 rack up respectable gains. The eurozone markets are lagging behind the British benchmark as a lack of major economic announcements from the region has led to a lacklustre session.
The Social Democrats in Germany, are to meet with Angel Merkel’s Christina Democratic Union party on Wednesday, so the former coalition partners can discuss the possibility of reaching another political deal. Traders will be approaching the meeting with cautious optimism. The DAX has been creeping higher in December, so this could signs of political progress could propel the market.
Mining stocks like Rio Tinto (LON:RIO), BHP Billiton (LON:BLT) and Glencore (LON:GLEN) are higher on the day after they all received upgraded from Citi Group. The Investment bank also upgraded Randgold Resources (LON:RRS) and Fresnillo (LON:FRES). The US bank also raised its price target for copper, zinc and Iron ore.
US
The Dow Jones, S&P 500 and Nasdaq 100 are edging higher as the US indices appear to have shrugged off the negative sentiment that crept in at the start of the month. 2017 has been an impressive year for US equity benchmarks and we could see another round of record highs from the before the year is out.
The job opening and labour turnover survey (JOLTS) report for October, came in at 5.99 million, while economists were expecting 6.09 million. The September report was revised from 6.09 million to 6.177 million. So overall it was a fairly mixed report. When you take into account the US non-farm payrolls figures last week, it paints a picture of a reasonably firm jobs market in the US.
FX
EUR/USD is driving higher as it continues its upward move that begun in early November. The euro is performing well today even though the only economic announcement from the region was Italian retail sales – which was very disappointing. In October, Italian retail sales declined by 2.1% on an annual basis, and that compared with the previous report which saw an increase of 3.4%.
GBP/USD is in the red as the sell-off that started on Friday has run over into this week. The weakness in sterling is attributed to trader’s nervousness surrounding Brexit. Prime Minister May is currently speaking in Westminster, and Mrs May is giving the Common’s a clearer breakdown of where the UK is in relation to the Brexit talks so far. The pound may have lost ground against the US dollar recently, but the upward trend from March is still in place.
Commodities
Gold is largely unchanged on the day as the selling pressure on the metal has waned. Last week gold fell to its lowest level for nearly 5 months, so the overall sentiment is clearly negative. It is concerning to see the weakness in the US dollar hasn’t enticed fresh buying. The Federal Reserve meeting on Wednesday is widely expected to deliver an interest rate hike of 0.25%, and dealers will be treading lightly on the run up to the meeting.
Brent Crude and WTI oil are higher on the day as the announcement that the Forties pipeline is being shut due to a cracked pipe. The pipeline carries about 40% of North Sea oil as gas, and it pushed the price of Brent crude to a level not seen since June 2015.
The extension to the OPEC and non-OPEC production cut was revealed at the end of last month, but already there are is disagreement among the members. The energy minister from United Arabs Emirates stated the deal may be reviewed in June, and the officials from Kuwait stated the coordinated cut could end before 2109.
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