European Stocks are Mixed with Italian Shares Outperforming
European stock markets are mostly slightly down in thinning holiday trade, with the DAX posting a small loss and the FTSE 100 down as well. The Italian MIB is outperforming and still holding on to a 0.33% gain amid Monte Paschi rescue hopes, but while U.K. and German indices remain at lofty heights investors seem reluctant to push levels out further like the U.S. where stock futures are lower and the Dow Jones is struggling to crack the much watched 20000 mark. In Asia the ASX managed to extend its Christmas rally, but elsewhere markets also closed mostly with a loss and in Hong Kong developers remained under pressure. Oil prices continued to drop following Wednesday’s larger than expected rise in crude oil inventories.
Oil prices are down for a second day, moderately extending declines sparked by the unexpected build in U.S. crude inventories in the latest reporting week. Libya also announced that it is expecting to deliver a further 270k barrels per day of crude, which follows news earlier in the week that pipelines from two of its key oil fields had reopened. This would add to Libya’s prevailing 600 bpd output, which itself was recently doubled. WTI is presently at $52.28, two cents above the low, which is a two-session low. Prices are still up 2.8% compared to last week, and up by 9.1% in compared to last month, which reflects the apparent commitment of OPEC and other key producers to trim supply.
Your capital is at risk
The ECB’s Weidmann fears pressure could unduly delay rate hike. The Bundesbank central bank said in an interview with Germany’s Wirtschaftswoche that his concern is “that in case of unsound fiscal policy, monetary policy could come under pressure to forgo an interest rate increase even though a tightening would be warranted”. Considering the ECB’s track record so far, this clearly is a justified concern as Draghi’s policies seem to a large extent driven by a desire to keep peripheral yields down.
Italian Retail Sales Were Stronger than Expected
Italian October retail sales stronger than expected at 1.2% month over month, up from -0.5% month over month in the previous month. The marked improvement at the start of Q4 ties in with strong German and French numbers that month and backs expectations for an overall acceleration of GDP growth in Q4 across the Eurozone. Consumption remains a main driver and with headline inflation moving higher again as negative base effects from energy prices fall out of the equation wage pressures should also start to pick up again next year.