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Europe loses momentum

The FTSE has been one of the few European equity markets able to keep its head above water.

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Source: Bloomberg

An escalation of hopes that a meaningful agreement could be brokered between most of the major oil producing nations helped drive equity markets on in the early session. These hopes however were quickly given a reality check when they managed to agree not to increase production above January’s already high levels. This agreement did not involve the likes of Iran and, as such, triggered a sell-off in oil prices.

The security investors felt from European Central Bank president Mario Draghi’s comments yesterday was only able to partially hold up markets. This morning’s German ZEW economic sentiment data might have been better-than-expected, but still hit 16-month lows. This shows how much more work is required to garner European business optimism.

US traders have come late to this week’s party and have struggled to regain the optimism of last Friday’s trading. Part of this reluctance to take a stand must be due to the fact Wednesday evening will see the release of last month’s FOMC minutes. If the capitulation of interest rate rising expectations over the last month is any sort of barometer the minutes could make for uncomfortable reading.

Considering the Saudi oil minister was not the driving force behind today’s meeting it should not come as too much of a surprise that results have underwhelmed expectations. An agreement – that doesn’t involve Iran – to limit production to last month’s record high levels has seen oil prices tumble as the template of oversupply and struggling demand remains firmly in place. With this being the case it is tough making a case for oil prices to remain above $30 for too much longer.

Currency markets continue to enjoy an overabundance of volatility. GBP/USD is having its biggest one-day move in over a month, touching intraday lows of $1.4276, while EUR/USD has sold off for the fourth day in a row taking it down to €1.1124.

FTSE 100 risers and fallers (as of 4.45pm) 

Company % change Index points
British American Tobacco +1.83 +5.02
Royal Dutch Shell - A +1.62 +3.84
Royal Dutch Shell - B +1.56 +3.69
BP +1.38 +3.27
Imperial Brands +1.69 +2.31


Company % change Index points
Standard Chartered -5.34 -2.53
Shire -1.5 -1.31
Prudential -0.88 -1.04
SSE -0.66 -0.35
Dixons Carphone -1.49 -0.25

The day ahead

Economic data:
9.30am – UK unemployment, claimant count and average earnings (December): claimant count: expecting -2500, prior -4300. Unemployment is expected to fall from 5.1% to 5%. Average earnings is anticipated to slip to 1.9% from 2%.
1.30pm – US building permits (January), housing starts (January) and New York state manufacturing index (February): building permits: MoM expected -0.1%, prior 3.9% and YoY expected 1203K, prior 1232K. Housing starts: MoM expected 2.5%, prior -2.5% and YoY expected 1178K, prior 1149K. New York state empire manufacturing is expected to rise to -12.53 from -19.37.
7pm – US Federal Reserve minutes: details from the FOMC meeting on 26-27 January will be released.
11.50pm – Japan trade balance (January): the trade deficit is expected to decline to Y105 billion from Y140 billion.

Corporate reporting:
France: Schneider Electric

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