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Oil prices continue to dominate global markets, with the European’s once more starting the day on a weaker foot despite the bullish tones set by last week’s European Central Bank (ECB) fuelled rally. News of record high oil production in Iraq, coupled with the Russians pumping at the highest post-Soviet rate compounded the already bearish sentiment that is evident within the crude oil market. Interestingly, while we are still seeing crude prices continue to influence European sentiment, the correlation between the size of moves within Asia and Europe appears to be on the wane, as a circa 6% drop in Shanghai led to considerably smaller percentage moves in the likes of the FTSE, DAX and CAC.
Today marks the second consecutive slow day from an economic perspective, with tomorrow expected to ramp up the volatility as the FOMC returns for the first time since its historical December rate hike. Expectations of a possible dovish shift in sentiment and the dot plot means it seems likely we could see some dollar weakness in the lead up to this event.
EasyJet shares continue to tumble this morning in the wake of a decline in revenue per seat and total revenue for the firm. The decline in revenues are largely attributed to the attacks in Paris and Egypt which sent shockwaves throughout the industry, sparking a rise in domestic trips at the expense of any destination that could be perceived as a target. The problem for easyJet investors is that they know any further attacks would likely be detrimental to the company’s share price and this linkage is likely to warn off the more risk adverse investors out there.
Ahead of the open we expect the Dow Jones to start 103 points lower, at 15,782.