European equities are in the red this morning as the slump in the price of oil continues to weigh on market sentiment.
We are seeing signs that demand for oil from Asia is slipping, and that is slightly worrying in itself. The other fear about falling oil prices is declining inflation, as it can hamper growth prospects.
The Queen’s speech will be delivered by Prime Minister May at 11.30am, and even though there is still no deal between the Conservatives and the Democratic Unionist Party (DUP), traders are hopeful that one will be reached. We are expecting to hear a lot about Brexit in the Queen’s speech, and some clarity on the situation would be welcomed by investors.
Berkeley Group are up over 2% after the homebuilder posted a 53% rise in full-year pre-tax profits. Home sales was 3.4% higher on the year, while the average selling price jumped by an impressive 31%. The house builder acknowledged there are uncertain times ahead because of Bexit, but forward sales are healthy.
The GBP/USD is at a two month low as the dovish commentary yesterday from the Bank of England Governor, Mark Carney, is still putting pressure on the pound. Mr Carney wants to keep interest rates low because Brexit talks begun this week, and he would rather a loose monetary policy while the outcome is still uncertain. Andy Haldane of the Bank of England is speaking at 12pm in Yorkshire.
We are expecting the Dow Jones to open unchanged at 21,467, and we are calling the S&P 500 3 points lower at 2434.
The US will announce the existing home sales figures for May at 1.30pm, and the market is expecting it to come in at 5.55 million, while the April figure was 5.57 million.
Oracle will reveal their fourth quarter earnings later on.
At 3.30pm the Energy Information Administration (EIA) will announce the latest oil inventory figures and the consensus is for a decline of 2.1 million barrels, and that compares with a decline of 1.66 million barrels from the previous report. Oil has fallen to a level not seen since November 2016.
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