30 January 2017 at 12:57 GMT
European stocks opened lower on Monday as US president Donald Trump’s immigration curbs sparked worries about the potential economic effects of the new administration's policies.
President Trump signed an executive order banning immigration to the US from seven countries with predominantly Muslim populations, igniting widespread protests at US airports and other locations.
Brent crude oil and WTI remain well and truly stuck within their respective ranges. Opec compliance and support from traders holding a combined gross long of 1 billion barrels is offsetting the rising number of rigs and production in the US.
US futures indices pulled back as investors prepare for a heavy week of data, with meetings at the Bank of Japan, US Federal Reserve and Bank of England slated, as well as numerous important corporate earnings results.
- Germany January preliminary CPI (2.0% exp. y/y) (1300 GMT)
- US December personal income (0.4% exp.) (1330)
- US December PCE core (1.7% exp. y/y) (1330)
- US December pending home sales (1500)
Trading has been very choppy on the FX side of the financial markets by Europe’s midsession on Monday. The USD index erased all its morning losses and reapproached local key support levels at 100.6.
EURUSD has been offered, down by about 0.25% to the current 1.067 as the broadly watched EU business climate index missed estimates (0.77 vs 0.8e). The economic sentiment Index, however, narrowly beat expectations (108.2 vs 107.9e). Germany’s provisional CPI numbers are expected at 1300 GMT. USDJPY slips 0.4%, trading near 114.65, with minimums of 114.24 tested earlier during the Asian session. GBPUSD keeps sliding off resistance, found at the 100-day exponential moving average at 1.258-1.26. With today’s decrease equal to 0.25%, it is currently traded at 1.2515.
FX Options volatilities
Nothing to report from the Asian vols market this morning due to holidays.
In Europe, we saw good selling interest in USDJPY. Overnight opened around 18.5 and is now 15.0. On the curve, we saw 9-month given at 11.9 and 2-month at 12.6.
EURUSD is also dominated by sellers today. Some 500-600 million of one-month was traded at 8.05, with one buyer, and the market is still quoting around this level.
GBP vols almost unchanged, if anything small bid relative to Friday. Term structures: the market is small bid for 3-month and even better bid for 4-month euro crosses. Nine-month also relatively bid compared with 6-month and 1-year in euro crosses, or 8-month even better. All of this stems from potential euro risk related to politics.
Shares fell in Europe after immigration curbs introduced by US president Donald Trump added an extra layer of uncertainty about the economic impact of the new administration's policies. The pan-European STOXX 600 index dropped 0.8%, led by a 1.6% fall in resources-related stocks as commodity prices fell.
On the movers list today, Vodafone rose 2.7% as the telecom company said it is in talks with Aditya Birla Group to acquire its Idea Cellular unit. Idea Cellular shares in Mumbai leapt 27%.
Lloyds Banking Group fell 1%. The UK government has cut its stake in the UK’s largest retail bank to 3.57 billion shares, or about 4.998% of issued share capital, from a previous holding of 4.24 billion shares. Lloyds was bailed out by UK taxpayers during the financial crisis, with the government taking a 39% stake.
Asset manager Aberdeen lost 3.5% after a negative article in the Sunday Telegraph.
Germany's Software AG traded up 5% after being upgraded at UBS and HSBC on its growth outlook.
US futures indices pulled back as investors prepare for a heavy week of data, a Fed meeting on Wednesday and plenty of important company results. The coming week will bring reports from a fifth of the S&P 500 index, plus five Dow components. Among those — and crucial for the consumer-reliant technology sector — will be Apple Inc. on Tuesday and Facebook on Wednesday, while Amazon.com reports on Thursday.
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.
Attention swings to the Fed with an FOMC scheduled
for Wednesday. Image: Shutterstock
— Edited by John Acher