Europe
It was a fragile market for European equities on Wednesday; investors were a little shell-shocked after the declines at the start of the week and were already looking ahead to the results of the ECB’s Targeted Long Term Refinancing Operations (TLTROs) on Thursday to give some better idea over the timing of any additional ECB stimulus next year.
Equities in China rallied as a fall in consumer price inflation meant the People’s Bank of China may have more room to loosen monetary policy but shares in Europe and the US were less enthusiastic about the prospect of stimulus from either China or Europe with the ECB having held back at the last meeting.
UK shares were trading in and out of break-even on Wednesday with more risers than fallers as airlines AIG and easyJet Plc (LONDON:EZJ) benefited from falling oil prices and are set to continue to do so according to a report from the International Air Transport Association (IATA).
On the other end of the scale of falling oil prices, BP has said it expects to incur restructuring charges of about $1bn over the coming year. The charges will be necessary for the company to pull out of projects dependant on a certain price per barrel of oil since the commodity price fell this year.
The 2010 Deepwater Horizon oil spill forced BP Plc (LONDON:BP)to downsize its business to pay for the billions in fines and damages. The timing of the restructuring charges is not unrelated to the fact that BP just lost an appeal case in the US Supreme Court to challenge a compensation deal it agreed to in 2012 to pay the victims of the oil spill in the gulf of Mexico.
Ashtead Group (LONDON:AHT) rose as high as much as 10% to an all-time high on Wednesday, after it raised its full-year earnings guidance following an increase in profits.
US
US markets were looking a little ropier on Wednesday after OPEC lowered its demand outlook for 2015 sending oil prices lower and energy shares alongside them.
There is concern that the very strong non-farm payrolls employment data last Friday means the Federal Reserve may drop the “considerable time” wording from its statement next week indicating an imminent lift-off from zero-bound interest rates.
Deteriorating data in China and Chinese authorities who have not quite gone whole-hog for loosening its policy stance yet is seeing risk-taking coming out of markets.
FX
The US Dollar was mostly lower on Wednesday as stimulus-uncertainty in Europe strengthened the euro, it was only oil-currencies the Canadian dollar and Norwegian krone that again lost out thanks to rapidly falling oil prices.
The one-sided bet in USD/JPY appears over for now with the pair dropping again below 119 having topped out just before 122. The trend in the falling yen was starting to lose steam especially with future QE uncertain while the results from the snap-elections in Japan are still unknown.
Commodities
After strong gains in the previous session on safe-haven flows, Gold and Silver flat lined on Wednesday
Oil prices sank to new multi-year lows after OPEC lowered its demand outlook for 2015
Since the interest-rate cut in Chinese equities, copper prices appear to have lost its correlation with Chinese demand, rather now fluctuating alongside oil prices as a barometer for global demand.
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