ZCZC
BCN-22
EUROPE-MARKETS
European Stocks rebound from big selloff as oil slumps
LONDON, Nov 14, 2018 (BSS/AFP) – Global stock markets rebounded Tuesday
from the previous day’s selloff, with Wall Street boosted by earnings
optimism and Europe holding up despite headwinds from Brexit talks and
Italy’s budget.
London, however, underperformed after the EU published contingency plans
for a “no-deal” Brexit, piling pressure on Britain as Prime Minister Theresa
May scrambles to unite her government behind an agreement.
European “stock markets are higher… as sentiment is slightly more
optimistic despite the political risks”, said David Madden, market analyst at
CMC Markets UK.
Reports just after the London closing bell said that a Brexit deal had
been agreed on a “technical level” and would go before the British cabinet on
Wednesday.
Oil prices slumped meanwhile after US President Donald Trump urged
producing nations not to cut output.
Equities on both sides of the Atlantic had tumbled Monday, with Frankfurt
shedding nearly two percent amid concerns over Tuesday’s EU deadline for Rome
to revise its 2019 budget, and the Dow losing more than two percent as doubts
were raised over Apple iPhone sales.
But Tuesday, the mood was more chipper, as positive earnings guidance from
US retail company Home Depot lifted sentiment in New York trading and Nasdaq-
listed Apple rebounded.
There was also talk of resumed trade talks between the US and China which
“may help ease some of the sting of festering trade concerns”, said analysts
at Charles Schwab.
– ‘On edge’ over Italy –
In foreign exchange, the euro recovered from a 17-month low of $1.1216
seen at the start of the week.
Earlier in Asia, shares in technology firms slid, tracking a deep sell-off
Monday in New York after Apple was hammered, while energy firms also fell
with oil prices.
Back in Europe, Britain reported a pick-up in wage growth, boosting the
pound and offsetting news of a slight increase in unemployment.
Italy’s populist government was set Tuesday to defy the European
Commission, preferring to risk financial sanctions than revise a big-spending
budget, and putting stock traders “on edge”, Madden said.
The coalition had been given time to change its 2019 plans but insists an
anti-austerity approach will help kickstart growth in the eurozone’s third
largest economy, and consequently reduce the public debt and deficit.
But Brussels forecasts Italy’s deficit will reach 2.9 percent of Gross
Domestic Product in 2019 and hit 3.1 percent in 2020 — breaching the EU’s
3.0 percent limit.
In the oil market, crude futures fell sharply Tuesday.
The commodity enjoyed a healthy rise Monday after Saudi Arabia called for
a global output cut of one million barrels per day and unveiled plans to trim
its own production by 500,000 barrels from December.
However, Trump later hit out at the announcement in a tweet calling for
prices to go lower.
“Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil
prices should be much lower based on supply!” he wrote.
OPEC on Tuesday trimmed its global oil demand growth forecasts for this
year and next, as kingpin Saudi Arabia tries to cut output to bolster prices
in a weakening market.
Crude has been torpedoed since hitting four-year highs last month as
dealers fret about oversupply, weakening demand and worries about the impact
of the China-US trade war.
Signs of a softer-than-expected impact from US sanctions on Iranian crude
exports have also weighed on prices in recent weeks.
BSS/AFP/HR/1018