Stocks in Europe look set for a lower open as investors continue to digest disappointment from the latest ECB meeting while a big drawdown in US oil inventories has sent Brent crude back towards $50 per barrel.
The FTSE 100 is set to open nine points lower, matching similar percentage declines in France and Germany, setting up for what could be the third down-week in four.
European markets tumbled in afternoon trade on Thursday after the ECB failed to meet the lowest of expectations for additional stimulus. The euro rallied before giving up most of its gains on profit-taking with EUR/USD near 1.13. There was some scope for the European Central Bank to extend the end date of asset purchases or change the composition of those purchases. Neither of these happened, which was not a big surprise, but there was evident dismay in markets that according to Mr Draghi, they were not even discussed.
US stocks dropped with the Nasdaq snapping a four-day winning spree as Apple dragged the tech sector lower in a reaction to its latest iPhone model and the news that it will no longer release pre-order numbers.
Oil prices gained nearly 5% in 24 hours in response to American Petroleum Institute and Department of Energy inventory weekly figures. Storms Gaston and Hermene prevented imports coming in from Africa and the Middle East on the East Coast and its estimated US oil output may have dropped over 10% as rigs closed down.
The huge two-day rebound in oil prices has been to a large extent ignored by stock markets and could play a bigger role on Friday, whether there is less corporate and economic data.
With the drop in the British pound playing a large role in the UK’s post-Brexit rebound, trade figures today will be scoured for signs of an improvement in exports. The UK’s trade deficit is expected to have fallen to -GBP4,200 in July from prior - GBP5,084 in June in data released today.
EURUSD – The euro pulled back from above 1.32 and just beneath resistance neat 1.134 with a large wick on the daily candlestick. The pair remains range-bound. Next potential resistance from 1.1340 then 1.1365 with 1.12 then 1.1130 as possible support.
GBPUSD – Cable fell for second day, coming away from the top of its long-term range. 1.3280 has held as support with a break lower possibly seeing 1.3185-1.32 as next support with 1.3370 now immediate resistance.
EURGBP – The rebound in the euro Sterling pair has reached resistance at 0.8485. Scope for another push higher to 0.8570 but would expect a retest of support near 0.8340.
USDJPY – Dollar yen has found some short-term resistance from the underside of its broken down-sloping trendline and the 50 DMA. May look for rise to possible resistance at 104 with 101 as support.
Equity market calls
FTSE100: to open 9 points lower at 6,847
DAX: to open 23 points lower at 10,652
CAC40: to open 9 points lower at 4,533
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