Europe
Shares in Europe were trading with a cautiously optimistic tone after German unemployment dropped to record lows and Euro area economic confidence improved while a drop in bank lending inside Europe was an indication further stimulus measures may be needed.
A reported drop in bank lending to businesses in Europe suggests the European Central Bank’s TLTRO program is having minimal positive impact on the number of loans to SMB’s implying a needed for additional stimulus. Further stimulus efforts could come in the first quarter of the New Year as hinted at by the president and VP of the ECB in recent speeches.
UK markets were held back by political uncertainty surrounding proposals for Scottish devolution in the Smith commission, the heavily-weighted resource sector fared the worst as oil shares plummeted alongside Crude Oil prices ahead of the highly anticipated OPEC meeting.
Scotland has gained more borrowing powers and will take control of national income tax and welfare under the new proposals. The commission raises as many questions as it answers particularly pertaining to Scottish powers in England and regional devolution within England all of which increases political uncertainty. The uncertainty is twofold for markets with devolution happening as Britain heads into the general election next year which stands a good chance of seeing no clear majority winner.
Petrofac (LONDON:PFC), BG Group (LONDON:BG) and Royal Dutch Shell (LONDON:RDSa)were some of the biggest fallers ahead of and after the OPEC meeting alongside supermarkets of which Sainsbury (LONDON:SBRY)’s saw the biggest losses on the day before Black Friday shopping begins.
Smith(Ds) (LONDON:SMDS) and ITV Plc (LONDON:ITV) shares moved higher as speculation continued over a possible bid from US firms Stryker Corporation (NYSE:SYK) and Liberty Global plc (NASDAQ:LBTYA) respectively.
US
US markets were closed for Thanksgiving.
FX
European currencies were trading lower against the US Dollar on speculation of new ECB measures in the New Year while the greenback saw losses against Asian currencies whose economies are poised to get a boost from stimulus in China.
USD/CAD and USD/NOK rallied as oil prices collapsed which will have a knock-on effect on the economies of the oil-exporting Canadian and Norwegian nations.
After breaking higher on Wednesday, GBP/USD fell back on political uncertainty towards 1.5750. A move back below the top of the prior range at 1.5735 calls into question the sustainability of the move higher.
The Japanese yen was higher against most major currencies ahead of inflation, unemployment, industrial production and retail sales data on Thursday night.
EUR/USD was stuck in the middle of its recent trading range between 1.2360 and 1.2575 still close to the multiyear lows
Commodities
Crude Oil prices traded heavily into the OPEC meeting on the expectation of no rate cut from the cartel to support prices then fell heavily to see losses of up to 4% on the day with Brent falling through $74 and WTI $71 per oz. after the cartel made the announcement of no cut to production.
Gold has spent this week trading in and around $1,200 ahead of the ECB meeting and US unemployment report.
Having pulled almost $2 off its lows, Silver has slipped back in the last two sessions threatening a move back to $15.
In stark contrast to rallying Chinese equity markets, Copper has remained distinctly flat in response to the PBOC stimulus.
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