European Shares Consolidate Despite Rally in Crude Oil
European stock markets are mostly down, with FTSE 100 and DAX little changed on the day, while Eurozone peripherals and especially Spain underperform. Banks are once again in focus, after Spain’s bank lost a European court ruling that said their floors on mortgage rates even as interbank rates dropped, was wrong. A Bank of Spain official said the maximum amount of mortgage floors that will be affected by the ruling is slightly above EUR 4 billion. The DAX is struggling to move higher after reaching new highs for the year yesterday. Oil prices are higher following the larger than expected draw in both crude oil and gasoline as reported by the American Petroleum Institute.
Spanish bank shares under pressure as the IBEX drops around 0.80% following a European Court of Justice ruling that requires lenders to reimburse mortgage customers who were overcharged on interest payments. The court ruled that lenders had incorrectly applied a “floor” to mortgage rates, even as inter-banking lending costs fell to a record low in the wake of the ECB’s very expansionary policy.
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French Producer Prices Where Stronger than Expected in November
French producer price inflation jumped higher in November, with the annual reading rising to -0.2 % year over year from -0.8% year over year, this follows a much higher than expected German number yesterday, where the annual rate rose to 0.1 %year over year from -0.4% year over year and Portuguese readings on Monday, which saw the rate jumping to 0.0 %year over year from -1.0% year over year. A further sign that with base effects from lower oil prices falling out of the equation headline rates could come back up quicker than anticipated. Deflation risks are clearly no longer on the agenda and that not just due to the ECB’s accommodative policy.
Crude prices have logged a nine-day high of $53.77, since settling to $53.58, which is still a net 0.5% up on the day. Prices were boosted by API data that showed a 4.15 million barrel draw on U.S. crude inventories in the latest reporting week. Crude prices are now showing the biggest December gain since 2010, and this despite the USD index reaching a 14-year high this week. The next focus will the EIA weekly inventory report were consensus forecast are for a 2.5 million barrel draw, which would the fifth straight week of declining stocks.