European markets awaiting - 14.11.2014

European markets are in a state of anticipation and stocks are traded in the sideways. Among the stock assets the biggest fall was shown by Total and BP, after Brent crude oil price hit a new low. IMI stocks lost 0.8% as the last earnings report was released: company’s profits reduced due to difficult market conditions. Meanwhile, Airbus earnings rose amid the expanding sales volume, and as a result, the stocks upped 2.7%. Despite the negative data of the fuel oil sector, Stoxx Europe 600 slipped only 0.1% as positive quarterly GDP was published in Germany and France. The German GDP rose 0.1%, GDP in France – 0.3%. It resulted in cautious investor optimism.

Major US indices are climbing as data on the US consumer demand is about to be released. S&P 500 is hitting new highs for four weeks in a row. Today it has grown 0.2%, and 0.4% - in a week. Futures contracts on Dow Jones Industrial Average also added 27 points, or 0.2% of the relative growth.

Halliburton company is negotiating the purchase of Baker Hughes Inc., which means the forced merger of the two energy giants amid steady fallen oil prices. Pending the merger, Baker Hughes stocks boosted 15% in New York yesterday. WTI crude oil prices keep falling, the longest fall over the past three decades. Brent crude oil also dropped 0.7%, dipping to $78 per barrel. As rumors spread, no drastic decisions regarding the supply restriction on the market will be made at the next OPEC meeting, which will take place in two weeks. Currently, OPEC members hold meetings to achieve preliminary agreements.
Gold and silver futures contracts are dropping. Amid fallen oil prices, the inflation risks are reducing greatly and the necessity to hedge funds is weakening. On the contrary, many analysts deem that deflation in the EU in the near future is the most dangerous factor. It should be noted also the overall US dollar consolidation which is associated with the rumors about the interest rate hike would take place next year. Gold prices dropped 2.1% over the last week.

In turn, deflation expectations in the EU pushed deep down the British pound. The surveys reveal that investors are pessimistic about the EU economic outlook. As a result, the currency of the largest trading partner of the EU, the British pound responded immediately, giving the preference to the bearish market.