Article / 29 November 2016 at 13:03 GMT

Mid-session Europe: Stocks struggle for direction as Opec looms

Saxo Markets
Denmark

t

Foreign exchange

Forex
 
European bourses traded mixed and FX markets were largely calm, with the US dollar steady, by mid-session on Tuesday, and many investors stayed sidelined ahead of a keenly awaited Opec meeting on Wednesday.

Brent crude oil has returned to the middle of its seven-month range amid nervousness and light volumes ahead of tomorrow’s Opec gathering.

French third-quarter preliminary GDP grew 1.1% year-on-year as expected; the quarter-on-quarter rise of 0.2% was also as expected.  Sweden's GDP grew 0.5% quater-on-quarter as expected.


Watchlist
  • German CPI month-on-month (1300 GMT). Expected at 0.1% vs prior 0.2%
  • US GDP annualised quarter-on-quarter for Q3 (1330). Expected at 3.0% vs prior 2.9%
  • US consumer confidence Index (1500). Expected at 101.5, prior 98.6
v
Forex developments

The FX markets were calm in the first half of the European session on Tuesday. The USD index balanced around unchanged vs Monday’s close, staying locked between 101.25 and 101.50. The US 2nd GDP estimate (1330 GMT) and US consumer confidence (1500 GMT) are likely to be the key macroeconomic data for the greenback today.

EURUSD has been largely unchanged, trading near 1.06 in light of some mixed Eurozone publications with France's 2nd GDP estimate for the third quarter matching expectations and the EU business climate indicator missing the consensus expectation (0.42 vs 0.63 est.). Germany’s inflation data (CPI) is expected at 1300 GMT.
USDJPY bounced from around 111.69 in the early hours to 112.60 currently, even though Japanese household spending numbers in the morning were less negative than estimated.

GBPUSD has been one of the main gainers today, spiking to around 1.249 in recent hours, having slipped below 1.24 during Asian trading hours.

The Aussie dollar is having a weaker day, weakening against USD by -0.25% after metals output dove into correction. Key resistance in the near term is at 0.75.


FX Options volatilities
 
Vols

Vols
Volatility remains well-bid in the front end (1w-3w), while continuous demand for the 6m area keeps the curve firm. Trading activity is on the low side.

The 1-week EURUSD straddle is now trading at 145-155 pips.

We have seen buying interest for downside EURJPY gamma.

There's some demand for the 113 strike in USDJPY for o/n, but also for December 12.

Big expiry 1.06 in EURUSD December 1.

So, with little news, it seems the market will continue to trade in a narrow range.
Historic versus implied is now expensive, but there are not many sellers at the moment


Fixed income

Rates
 
Commodities

Commodities
 




d
Equities




European stock markets were struggling for direction on Tuesday. The FTSE 100 index lost 0.7% to 6,749 points, while France’s CAC 40 index rose 0.5% to 4,530 and the Dax 30 index was flat at 10,583. Investors are staying on the sidelines ahead of Wednesday's closely watched Opec meeting and the Italian constitutional reform referendum at the weekend.

Italian banks were among biggest advancers, rebounding from sharp losses suffered in Monday’s action. The sharp moves reflect uncertainty before the country’s referendum on proposed constitutional reforms on Sunday. Analysts fear a rejection could unleash political and economic uncertainty in a country that is already battling with a banking crisis. Banca Monte dei Paschi Siena gained 4.4% to EUR 17.97, while Intesa SanPaolo, Banca Popolare and Unicredit added 2%.

European indices were also weighed down by oil shares ahead of a meeting of the Organization of the Petroleum Exporting Countries in Vienna on Wednesday. A technical meeting on Monday — without Opec kingpin Saudi Arabia — failed to yield an agreement on how to freeze or cut oil production, media reports said. In London, BP plc lost 1.9% to GBp 443, while oil group Total fell 0.7% to EUR 43.72 in Paris.

Shares in Antofagasta, BHP Billiton, Rio Tinto and Anglo American fell by 1.7% to 3.4% following a 1.2-2.1% drop in prices of copper , aluminium and nickel.

Swiss biotech firm Actelion fell 4.6% on a report saying the company was not actively considering selling itself, but instead weighing a "complicated deal" to link with Johnson & Johnson.

TalkTalk rose 4.2%, rebounding off four-year lows, after Britain's telecoms regulator said it will go to the European Commission to try to force BT to legally separate from Openreach, the network that delivers broadband to millions of homes and businesses.

US futures are trading up 0.1% ahead of US GDP and consumer confidence data this afternoon.


Read more

Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.






Vienna
 Opec, the oil-producers' cartel, meets in Vienna on Wednesday. Photo: iStock


— Edited by John Acher and Michael McKenna

The Global Sales Trading desk is a multi-asset team providing customised trading solutions

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail