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Europe’s Markets to be Dominated by Pessimism, as Global Exchanges Are Battered By the Negative Developments




The financial scouts expect that in the days to come, Europe’s markets will continue to be dominated by the surge of negative developments that has lately overpowered the major global markets. The sell-off hitting the EU markets was also fuelled by the weakening oil prices.
Lately, the bulk of the negative market news has come from the US, whose weak statistics and the looming new interest rate hike by the Federal Reserve make investors feel pessimistic. Moreover, the Fed has said that the US companies fear that they may be hurt by new Chinese import tariffs. The businesses now have to deal with higher commodity prices driven by the tariff rises, and so they plan to charge higher prices to their customers.
Another point of interest, according to the financial scouts, is that traders are awaiting the Italy’s budget crisis outcomes. Previously, the European Commission rejected the country’s draft budget and asked Rome to submit a new one within three weeks. Yet another negative driver is that investors are wary that a worst case Brexit scenario will play out. So it is likely that the post-Brexit transition period will be extended.
And finally, a major source of pressures for the EU markets is the global oil market uncertainties, with the investors too often overwhelmed by the sudden price hikes and slumps.


Ivan Marchena, Libertex Analyst

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European Markets to Be Volatile Amid the Massive Uneasiness


European markets will continue to be volatile, following suit of the mixed dynamics seen by the stock exchanges globally. But then, Europe’s markets have recently been much more moderately downbeat than the rest of the world’s markets.
For the EU markets, a key driver fuelling the uneasiness and insecurity is the US-China trade war outlook and how China’s economy’s prospects might be affected. As China’s industrial profits decreased after nine months of the current year, traders expect the country to face more economic challenges that might be triggered by the still unresolved US-China trade conflict. Though the People’s Bank of China has pledged policy support to the national economy that will be offered should the country be hurt by the challenges, investors understand that this would only allow the country’s to keep its economic performances at their current level.
Financial scouts note that investors are waiting for the S&P’s decision regarding Italy’s credit rating amid its budget standoff with Brussels. The country’s long-term credit rating by S&P has so far remained untouched at ‘BBB’. But now investors expect that Italy’s credit rating outlook might be downgraded to ‘negative’.
Yet another source of uncertainty is the global oil markets with its unstable prices showing mixed trade. What attracted the traders’ interest was that Iran’s top government officials say that the country’s oil exports will not fall below 1 million barrels per day on the looming new US sanctions.
Ivan Marchena, Libertex Analyst

European Markets To Lag Behind the Rest of the Markets Globally On Unresolved EU Issues


In the nearest term, Europe’s markets are likely to be rather downbeat versus key global markets. The European indices might show negative dynamics after the previous period of their modest growth despite the mainly pessimistic environment.
As for the American and Asian investors, they are substantially optimistic mainly due to the robust financial figures reported by the major US companies. Furthermore, traders are now expecting that the US-China trade war might finally be resolved, as the US President Donald Trump said a “great deal” with China was around the corner.
Meanwhile, the European markets are more apt to be driven by the EU news with investors watching things like what will happen next regarding Brexit. Financial scouts say that even though no deal has been reached yet, some progress seems to be seen. The good news is that the British bank stocks’ performance might be bolstered by the fact that the UK banks will be able to operate soundly in the EU after Brexit happens.
On the negative side, Europe’s markets, together with any of the markets globally, will face pressures from the falling oil prices. Once there has been no reason to expect a possible oil supply shortage due to the Iranian oil exports cut on the back of the US sanctions, the oil prices were headed dramatically south, since traders are now confident that Libya and Saudi Arabia can supply enough oil to keep the market satiated. Thus, there are no fears anymore that the market might run short of oil.
Ivan Marchena, Libertex Analyst

Financial Scouts Say Europe’s Traders Will Continue To Follow News About The US-China Trade Conflict, Brexit
Europe’s stock markets will continue to face some pressure due to the US-China standoff resolution uncertainty. EU traders will also keep track of the Brexit news and global oil market developments.
Trade differences between the US and China will remain the focus of interest for European investors. The news regarding the trade spat are quite contradictory, with the markets propelled upwards and downwards interchangeably every time a fresh piece of trade war news appears. However, some progress has been seen here, so traders are awaiting positive updates on this arena.
Brexit news looks similarly ambiguous. London and Brussels have little time ahead to agree, which fuels traders’ concerns, as they apprehend that a ‘hard’ Brexit will happen. Meanwhile, some headway has been seen here, too. Specifically, concessions have reportedly been secured from Brussels to keep the whole of the UK in a customs union in the wake of Britain’s withdrawal.
Another market experiencing a quite high volatility is the oil market, with the volatility driver being Washington’s new anti-Iran sanctions that came into force on November 5. Traders originally expected that new sanctions might drive oil supply shortage in the global market due to the apprehended Iranian oil exports cut. But in light of waivers given to some countries the oil undersupply seems unlikely to happen.
Ivan Marchena, Libertex Analyst

Europe Worries About Oil and Waits for the U.S. Federal Reserve System to Decide on the Rates


European stock markets are feeling optimistic after the results of the U.S. midterm Congressional elections were announced. However, some uncertainties remain due to the Brexit terms and ambiguous trends in the global oil prices.
In the course of the U.S. midterm Congressional elections Democrats won the House of Representatives, but Republicans still control the Senate. The U.S. President Donald Trump is expected to meet with certain difficulties in implementing his initiatives, especially the trade ones. Thus, there is reason to hope that he will not be able to bring up new restrictions, particularly, ones affecting the importing of the European goods.
Financial scouts are certain that the global investors will direct their attention to the December meeting of the U.S. Federal Reserve System, at which it can decide on increasing the rate. Forecasts expect it to be raised to 2.25-2.5%. Investors also await news of the Brexit terms.
Uncertainties of the global oil market are a cause for unrest in Europe as well. New U.S. sanctions against Iran introduced on November 5, stipulate some countries to be temporarily exempt. Italy and Greece made it to the list of those exceptions in Europe.
However, the list turned out to be quite a complicated matter for the European investors. For example, Spain has been purchasing Iranian oil as well, but it failed to be included, while Italy was.
Ivan Marchena, Libertex Analyst

EU Markets Cheered by the Draft Brexit Deal, But Investors Are Wary About Italy’s Economic Challenges
Europe’s markets are likely to be headed south as the US-China trade relationship has been stubbornly dominated by uncertainty, and also due to Italy’s economy quandary and overwhelmingly pessimistic oil market sentiment.
On the plus side, the European markets will be bolstered by the news that the EU divorce deal has been eventually reached. Despite the array of pessimistic forecasts, London and Brussels have successfully struck the Brexit withdrawal deal on all items discussed including the most touchy and contentious ones.


As far as the US-China trade spat is concerned, there has not been a hint of certainty about how and when it will be resolved. Still, investors are hopeful that the two opposing countries will get back to the negotiation table soon.
Meanwhile, Italy’s budget deficit has remained the front-burner concern for Europe, as Italy refuses to revise its draft budget for the next year including the country’s GDP growth rates and the budget deficit figures. Amid the budget turmoil, the Italian treasuries and government bonds yields are growing at an accelerated pace, which might trigger a full-blown debt crisis, as yet today, Italy is Europe’s second largest debtor after Greece.
In the French market, investors were upset by the US President Donald Trump’s bashing concerning France’s high wine import taxes curbing US wine sales in the country.


Financial scouts say that the markets are anxious globally. Oil prices change their direction every time fresh news appears, but in the medium run, traders fear that the oil supply may be excessive.
Ivan Marchena, Libertex Analyst

Europe’s Markets Anxiously Waiting for the Brexit News and Italy’s Budget Developments

European investors are waiting hopefully for further progress in the US-China trade dispute to happen after some positive developments have occurred along this avenue. On the negative side, markets will continue to face pressures due to Brexit uncertainties and Italy’s next-year’s budget issues that have still not been fully resolved, financial scouts note.
Meanwhile, investors keep hoping that US won’t slap new tariffs on the Chinese imports. China says it doesn’t want to fight a trade war with the United States, while the US pledges Washington “will not change course” on trade policy “until China changes its ways.”
European traders are also anxious to know what new Brexit moves are actually to be made now that London and Brussels have worked out a draft divorce deal, as the UK prepares to leave the European Union on March 29, 2019. After the draft deal has been pulled off, it needs the approval of UK MPs and each EU member state. And if it has not been approved before the Brexit day, ‘hard’ Brexit might be brought about with negative outcomes to possibly hurt the UK and the remaining EU members.
Yet another source of concern for investors is Italy’s 2019 budget turmoil with European Commission’s report on Italy's debt to be issued on upcoming Wednesday, November 21. Traders are wary that disciplinary procedure might be brought against Italy, if the country’s draft budget challenges its tax and budget commitments to the EU.
In France, the “yellow vest” protests against fuel price rises still continue. And though President Emmanuel Macron says he “hears the anger”, he seems to be set to keep taxing fuel.

Ivan Marchena, Libertex Analyst

Europe’s Markets to Remain Volatile as Investors Wait for the Italy Budget Impasse to be Resolved

Europe’s stock markets are awaiting the outcome of the Italy budget crisis. Most likely, we’ll have some certainty about what really happens in early December. Investors are somewhat worried about the situation, with market prices going both ways.
The Eurogroup is scheduled to meet on December 3 and will most likely discuss the issues faced. Italy’s government are hopeful that there will have a constructive dialogue with European Commission Head Jean-Claude Juncker. Still, investors fear that Italy may be disciplined with EDP measures to be imposed against it.
Meanwhile, traders never stopped watching the US-China trade war developments, with a U.S. government report appeared that accuses Beijing of stepping up efforts to steal technology via network hacks.
Also, investors are awaiting the outcomes of the upcoming meeting between Presidents Donald Trump and Xi Jinping at G20 Argentina 2018 summit in December. If traders understand that trade risks still remain high after the summit, they might reasonably have reason to doubt that the Federal Reserve will raise rates again as planned in its next meeting. So far, the Fed predicts the fourth hike before the year ends, likely coming in December.
Global oil markets are dominated by uncertainty, too, with the oil prices plummeting and then soaring again. Investors are awaiting the OPEC+ meeting in early December with the oil production cut likely to be endorsed to bolster prices. In the medium term, traders are wary that the oil market supply might be too high.
Ivan Marchena, Libertex Analyst

Europe’s Markets to Remain under Pressure, As Investors Await the G20 Summit and OPEC+ Meeting Outcomes

Europe’s investors’ eyes are on the G20 summit to be held from November 30 to December 1 in Argentina. Investors expect that some new arrangements might be worked out by the US and China that would hopefully help to break the trade impasse. The positive expectations are driven by the US President Donald Trump’s saying earlier that he intends to discuss the situation with the Chinese leader on the sidelines.

Another main focus for European traders is Brexit terms that remain a front-burner concern even though key agreements seem to have been reached between Brussels and London. Meanwhile, new setbacks might still occur. Previously, the sticking point had been a rift over Gibraltar, as Spain had contested the disputed territory’s status and threatened to veto the Brexit withdrawal agreement. But eventually the UK and Spain have struck a Brexit deal over Gibraltar.

On the positive side, the European indices might be underpinned by the euro weakening versus the US dollar, as investors become less attracted to high-risk assets including high-risk forex investments and now tend to prefer buying robust currencies like US dollar.

And on the negative front, oil prices continue to face pressures even though some OPEC members, primarily Saudi Arabia, have been sending out signals that the decision to curb oil production might be taken in the OPEC+ key meetings to be held in Vienna from December 5 to December 7.
Ivan Marchena, Libertex Analyst