The FTSE 100 is higher as energy stocks are receiving a boost from the upturn in the oil market on account of the Forties North Sea pipeline being closed for maintenance. 

Europe 

Brent Crude oil hit a level not seen since early June 2015 and that has pushed up the price of Royal Dutch Shell and BP. The underlying oil market has since turned lower, but the oil stocks are still in positive territory. Energy producers like Centrica, National Grid and Scottish and Southern Energy are higher on the session as a gas explosion in Austria could disrupt supply.

Ashtead shares are up 2% after the equipment rental company revealed a 20% jump in revenue and a 23% increase in pre-tax profits. The UK headquartered company derives the majority of its revenue in the US, and the clean-up required in the wake of Hurricane Irma and Harvey gave the company a boost. The share price of the Ashtead has been in a steady upward trend since early 2016, and today it hit a record high, and the bullish move it likely to continue.

Kantar Worldpanel issued their report on the UK supermarket sector, and they stated the grocery inflation jumped to its highest level since 2013. The deep discount retailers Lidl and Aldi continued to aggressively grow their market share, while Tesco was the best of the ‘big four’. It appears that Morrisons and Sainsbury’s underperformed, and that has weighed on their share prices.

US

The Dow Jones, S&P 500 have carried on from last night’s bullish run and both indices have set fresh record highs. The NASDAQ 100 is playing catch-up and is eyeing its record high. The American markets are still optimistic the US government will pass the pro-business tax proposals of President Trump.

The Federal Reserve will start its two day meeting today, and will reveal its decision in relation to the interest rate decision tomorrow at 7pm (UK time), and the press conference will follow at 7.30pm (UK time). Dealers are expecting interest rates to be increased by 0.25%. The press conference is likely to be the last update from Fed Cahir Janet Yellen, as she will be replaced by Jerome Powell in February. Traders may not be able to learn much from the press conference tomorrow as the make-up of the US central bank will be very different in 2018, and we don’t know what direction they will take.  

FX

EUR/USD has had a rough ride today as the German ZEW reading fell, and the US produced a solid producer price index (PPI) reading. The ZEW economic sentiment report fell to 17.4, from 18.7, and traders were anticipating it to fall to 18. This put downward pressure on the euro, and then the annual PPI rate in the US jumped to 3.1%, up from 2.8%. Traders are buying on the greenback ahead of the Fed’s interest rate decision tomorrow.

GBP/USD experienced a high amount of volatility today as the UK CPI ticked up to 3.1% - it’s highest since 2012. Sterling rallied on the back of the figures, but the positive move was short lived. The pound came under selling pressure after the US PPI figure was posted. The greenback is likely to be in demand as the Fed are tipped to hike rates tomorrow, and traders won’t want to bet against them.

Commodities

Gold fell to a fresh five month low as the stronger dollar and the prospect of a higher interest rate rise from the US central bank tomorrow is prompting selling of the metal. Gold was well and truly snapped out of the range bound move that it was locked in for most of October and November. The risk-on attitude of traders is also adding to the drop in gold.

Brent Crude oil and WTI are now in the red as profit taking has set in. The energy market was stronger earlier as the Forties North Sea pipeline was shut due to a repair, and that sent Brent crude oil to a fresh 30 month high.

Nigeria is the largest oil producing country in Africa and oil workers are planning on striking next week, but a report at lunchtime stated that union officials are to meet with the government tomorrow to discuss the labour dispute. This announcement triggered selling in the oil market.   

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