European equity markets are offside today as traders are still spooked by Friday’s sell-off.
The major decline that we witnessed at the end of last week rattled dealers and that bearish sentiment hasn’t gone away. The announcement from Ryanair that fares could be cut to order to fend off competition has put pressure on the entire airline sector. The strength of the euro is still causing problems for Continental equity markets.
Shares in Volkswagen, Daimler and BMW are in the red today after the EU antitrust body confirmed it is investigating allegations there was collusion between the big car manufacturers over diesel emission treatment systems and cost agreements. While the investigation hangs over the industry, investors will be wary of those stocks as European carmakers have been hit hefty fines in recent years.
The EUR/USD is slightly weaker this morning as France, Germany and the eurozone reported their manufacturing and services data for July. The general theme was that they are growing at a slower rate, and the majority of the reports came in below expectations. That being said, the euro is still north of $1.16 and uptrend is still intact.
The GBP/USD shrugged off the IMF’s downgrade of UK growth forecasts, and the pound has retaken the $1.30 mark.
OPEC and non OPEC members will meet in St Petersburg today to discuss the coordinated production cut they have in place. So far the extension to the oil production cut that was announced at the meeting in May has been unsuccessful as the oil market has dropped by 11% since then. There is talk that Libya and Nigeria will be asked to comply with the production cut but traders aren’t holding their breath that they will agree to it. Dealers feel that individual countries look after their own interests first, and care about the OPEC’s goals second. WTI and Brent Crude oil are higher on the day.
We are anticipating the Dow Jones to open 30 points lower at 21,550, and we are calling the S&P 500 down 4 points at 2468.
The US will announce flash manufacturing and services PMI reports for July at 2.45pm, and the consensus is for 52.1 and 54.3 respectively. The US will reveal the existing home sales report at 3pm, and traders are expecting 5.58 million for June, and that compares with5.62 million in May.
Alphabet and Halliburton will announce their second-quarter figures today.
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