Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European stocks traded without major fluctuations. The OPEC meeting will be the main event of the day. In recent days the climate of concord has led to somewhat hostile statements from Iran and Saudi Arabia as well as a certain distance from Russia. To reach an agreement, the cartel will have to address some of the following issues:
• Iran – After international sanctions have been lifted, Iran intends to restore pre-sanctions production, which is approaching 4 million barrels per day. Currently, Iran produces about 3.6 million barrels per day. While oil revenues account for only 25% of total state revenues (compared to Saudi Arabia’s 70%), Iran is attempting to relaunch the economy and attract foreign investment after the years of sanctions and needs to increase production and Of crude oil prices. In addition, there are a number of political and religious disputes with Saudi Arabia that hinder the agreement.
• Iraq – This country is producing at its maximum capacity (4.5 million barrels) and has used its war to the ISIS as an argument not to reduce production.
• Russia – This country, along with Saudi Arabia has been one of the major promoters of this initiative. However, Russia has never committed itself to reducing its production, limiting itself to freezing current production. The point is that Russia has recently reached the maximum levels of production of the post-Soviet era. The involvement of Russia is important because the cartel fears that if it decides to reduce production, the other producing countries not only benefit from the possible rise of the crude to such a decision but also gain a greater market share at the expense of the OPEC countries.
The Persian Gulf countries also know that a sharp rise in oil will make many US oil holdings that had previously been shut down profitable due to falling prices.
US markets closed with modest losses, despite the sharp drop in oil (-3.90%). This year’s best performer on Wall Street is the Russell 2000 that prolonged the falls on Monday. However, this index had recorded an extraordinary series of 15 consecutive positive sessions. The second reading of GDP for the third quarter showed an expansion of 3.20%, above the previous reading of 2.90% and compared to the forecast of 3%. This is the strongest pace of economic growth in the US since the third quarter of 2014, when GDP rose by 5%. Private consumption, which accounts for more than two-thirds of the country’s economic activity, increased 2.80% in the third quarter, after the 2.10% previously mentioned. Inflation associated with GDP reached 1.40%, compared to the estimated 1.50%. According to data presented today by the Conference Board, US consumers have been more optimistic about the economic outlook. The respective index reached 107.1 in November, above 98.6 in October and the 101.2 expected by economists. In the last week there has been some euphoria on Wall Street, which in some ways has reached extreme levels. In fact, private investor optimism has peaked in the last two years. Since the election of Donald Trump there has been a sharp increase in subscriptions to shareholder funds that is fueled by the rescue of bond funds. Despite these subscriptions, stock investment funds experienced the biggest weekly drop in liquidity since 2009. These remarks suggest some prudence in the short term (especially if the S & P breaks the 2180s) but do not invalidate the strong medium-term trend that characterized The US indices in recent months.
The Asian indexes closed without major fluctuations, despite the weakness of the oil sector. Contrary to what has been observed in Europe, the Asian markets have not corrected after the strong valuations in the post-election period. These markets have been characterized by a consolidation movement that indicates that investors are rethinking their prospects for the new reality without falling into the temptation to realize some profit taking.