Summary:
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Some small selling seen in indices ahead of key event
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European inflation slows as expected
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Oil.WTI revisits $50 a barrel
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Oil giants already launched blockchain-based trading platform
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CAD mixed after GDP meets forecasts
There’s been a little bit of downside seen in the stock markets as investors nervously await the outcome of key meetings between world leaders at the G20 summit in Buenos Aires. The US President Donald Trump will meet with his Chinese counterpart Xi Jinping to discuss trade relations tomorrow evening and this could well cause some large moves when markets re-open on Sunday evening/ Monday morning. The US500 dipped lower earlier but has since recovered whereas European markets have shown similar moves but remain a little lower on the day.
On the data front the German and Spanish CPI inflation readings released yesterday both came in below market expectations putting some pressure on the common currency. Adding to that the French print released today that also showed weaker than expected price growth figures, the landscape ahead of the reading for the whole bloc could not be named as best. Indeed, the European CPI inflation fell in November but it managed to meet consensus estimate of 2% YoY. On the other, the core measure dipped to 1% YoY while markets expected it to stay at 1.1% YoY. Simultaneously to November’s CPI reading the unemployment rate for October was released and it remain at previous 8.1% (expected drop to 8%).
It looks set to be another weekly decline for the price of crude with Oil.WTI on course to finish lower for the 8th week in a row! While the declines since Monday have been relatively small compared to previous weekly losses, the market is once more in the red on a W1 timeframe nonetheless. Price had attempted to recover after making what appeared to be a false break lower earlier this week, but Oil.WTI has revisited the $50 mark this afternoon and lows of 49.43 could now be seen as key support. The reason behind today’s selling appears to be reports from Russia’s Tass news agency where the country’s energy minister has said that OPEC and its partner producers outside the cartel (including Russia) are comfortable with current oil price levels. The news signals that Russia could oppose a production cut when OPEC and its allies gather in Vienna next week and marks a complete reversal from reports yesterday that suggested Russian officials were likely to cut output in tandem with OPEC. However, it should be noted that we’ve seen a bounce above the prior lows and the market could now look to recoup some of the recent losses.
Friday has not been successful for cryptocurrency traders compared to previous days. Major cryptocurrencies have experienced some losses after a slight recovery seen recently. The capitalization of the whole market sits a little below $130 billion. Looking around various coins it’s worth focusing on Bitcoin (BITCOIN on xStation5) and DASH (DASH on xStation5) which have not performed well so far being roughly 6% lower on the day. The blockchain-based oil trading platform created by Vakt Global, a consortium formed a year ago by some major companies including BP and Shell, was launched on Wednesday, as Reuters reported. The new platform could be an answer to some inefficiencies the industry faces. The blockchain-powered solution may potentially, for example, speed up crude oil deals, reduce costs significantly, and provide security. Access to the platform is now limited, only companies participating in Vakt could use it, but it will be opened for other users in January 2019, according to Reuters.
With the Lion’s share of the focus amongst traders on any comments coming from Buenos Aires today - not so much on the USMCA but a US-China trade truce - it is easy to overlook the latest growth figures from North America. The Canadian economy expanded by 2.0% in annualised terms in the 3rd quarter, in line with expectations and down a little on the 2.9% seen in the previous quarter. In terms of the breakdown there was a worrying fall in consumption which rose by just 1.2% which is the slowest pace in more than two years. The USDCAD has found some resistance around the recent peak of 1.3385 and this may prove a significant hurdle to overcome. The market remains in a rising trend channel with the lower bound currently around 1.3220.
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