With the US celebrating the Thanksgiving bank holiday on Thursday, markets should be a lot quieter heading into the weekend even with much of the news flow coming from Europe.
The market bounce didn’t last too long, with some late selling in the US session possibly worrying investors and weigh on sentiment today. It’s never encouraging when investors lock in profits heading into the close before a bank holiday or weekend, particularly on the back of a period of weakness in the markets and when confidence is already shaky at best.
Naturally, the bank holiday in the US leaves us with barely any market events of note for the rest of the day, with eurozone consumer confidence and a speech from BoE policy maker Michael Saunders the only notable items. Even these are unlikely to have much, if any, impact on the markets which means focus will be entirely on the political landscape with Europe providing plenty of drama to compensate for the lack of activity.
Brussels has been at the centre of the drama again this week, with Theresa May visiting on Wednesday but failing to finalise the terms of the future relationship ahead of the EU summit on Sunday. Reports this morning though claim these details have been cleared up and a draft text on future ties has been agreed which has pushed sterling up close to 1% against the dollar.
Unfortunately for May, this is the easy bit, now she must sell the exit agreement to her own parliament. Given the level of criticism her deal has received from across the board – be it leavers, remainers, Conservatives, their DUP partners, Labour, the SNP – this is no easy task, with the only thing going for it being that it is better than the only other currently viable alternative, no deal.
Italy remains a cause for concern despite its markets doing ok yesterday in the aftermath of the European Commission rejecting its budget and pursuing an excessive deficit procedure which could lead to sanctions. There may have been a “buy the rumour, sell the fact” element to yesterday’s trade given how expected the outcome was, but today they are coming under some pressure again as the government continues to show defiance in the face of sanctions and market pressure.
Oil is trading more than 1% lower again today, failing to build on yesterday’s bounce on the back of another inventory build being reported by EIA. With oil now trading around 30% below its highs, momentum does appear to be easing for now which may provide some support for WTI and Brent. The pair may find some support now around $50 and $60, respectively, with the OPEC+ meeting only a couple of weeks away which could have significant near-term implications for the price.
