European stock markets haven’t moved much today as it has been a quiet day for news. The macroeconomic and political outlook is largely still the same from last week. 

Europe

Volatility has been low and we have seen some small amounts of profit taking. Stock markets have been strong in Europe lately and it appears the bulls are taking a breather today.

The recent rally has seen the FTSE 100 reach a multi-month high, while the CAC 40 and DAX notched up all-time highs last week –so sentiment is clearly bullish.

The recent weakness in the pound is likely to keep the FTSE 100 in demand, while the stimulus programme by the European Central Bank (ECB) could keep the eurozone markets propped up.

The IBEX 35 is down 0.35% as the political uncertainty in Catalonia continues.  The election in Catalonia next month will be carefully watched by investors, and given the high stakes involved, investors will be treading lightly.

BTG shares are down 5.1% after the US court ruling went against them, and they will have to pay out $55.8 million to two companies for breaking a distribution agreement. On Friday, the share price hit a fresh two year high, so today’s announcement triggered some profit taking. The stock has been in an upward trend in 2017, and if it holds above the 200-week moving average at 652p, it might target the all-time high of 834p.

US

It’s another round of record highs for the Dow Jones, S&P 500 and NASDAQ 100 as the buying momentum keep driving on in New York. In a telling sign of the market behaviour, the major indices are eking out new all-time highs, while the volatility index (VIX) is down 0.8%. A sizeable move to the downside in the VIX usually equates to a rally in equities.

The mediocre non-farm payrolls report from the US on Friday as assisted to the positive mood today. The figures weren’t great, which leaves traders not being too fearful about a raft of rate hikes from the Federal Reserve in 2018. The US economy is still creating jobs so there is something positive to say about the announcement, but it was just adequate enough to be on the positive side. 

William Dudley of the Federal Reserve will retire in the middle of 2018 – a clue was dropped over the weekend so it didn’t come as a major surprise. The vacancies at the US central bank will leave traders wondering what direction the bank might take next year.

FX

GBP/USD has managed to pull back some of the losses it incurred on the back of Thursday’s sell-off when the Bank of England (BoE) did a dovish interest rate hike. There has been little to go on today for sterling traders as there were not major economic announcements from the UK. The pound is still in its upward trend that it has been in since March and if it can remain about the $1.3000 region, it is likely to continue pushing higher. 

EUR/USD is weaker on the session as the service sector reports for Spain, Italy, France and Germany all came in below expectations. It wasn’t a major blow to the since currency, but it was enough to weigh on it. The ECB are leaving the option on the table to keep the stimulus package in place, should they think it is required. Should the region keep producing economic indicators that come in under forecasts it will ramp up speculation that more monetary easing is needed.

Commodities

Gold continues to dance around the 100-day moving average at $1275. That metric has been like a magnet to gold recently as hasn’t been too far away from the price. The metal hasn’t budged much over the past week, and the trading range has been tight. Gold is holding its ground fairly well considering traders are pricing in a high probability of a rate hike from the Federal Reserve in December.

Brent Crude oil and WTI have rallied today as Saudi Arabia’s clamp down on corruption has pushed the power in the direction of the Crown Prince Mohammaed bin Salam – who is in favour of the OPEC production freeze. The largest oil producer in the world has been hinting at extending the co-ordinated production cut beyond the March 2018 deadline. Traders fear the Crown Princes’ plans could include curbing the supply of oil, and this is prompting the push higher.

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