Euro­pean eq­ui­ties lit­tle changed

Malta Independent - - FINANCIAL -

The re­cent surge in volatil­ity in the cur­rency mar­ket has done lit­tle to dis­turb the rel­a­tive calm that Euro­pean eq­uity in­vestors are bet­ting on.

While the re­gion’s shares were lit­tle changed to­day and have moved in a tight trad­ing range for the past few months, the euro has weak­ened al­most 7% against the green­back since Au­gust. That’s push­ing the VS­toxx In­dex measuring ex­pec­ta­tions for eq­uity swings to a one-year low rel­a­tive to euro-dol­lar swings, which reached the high­est since June this month.

The weaker euro is fail­ing to boost Euro­pean stocks as it did last year. Political risks are at the cen­tre of in­vestors’ con­cerns. Fol­low­ing the UK’s un­ex­pected vote to leave the Euro­pean Union, traders are await­ing Italy’s con­sti­tu­tional ref­er­en­dum next month and 2017 elec­tions in France.

The Euro Stoxx 50 In­dex is trad­ing at 13.2 times es­ti­mated profit, a higher mul­ti­ple than its five-year av­er­age. The bench­mark added 0.2% at 11.34am in London, with the vol­ume of shares chang­ing hands about 45% lower than the 30-day av­er­age. US mar­kets are closed for Thanks­giv­ing.

The euro was lit­tle changed against the dol­lar, af­ter slump­ing to its low­est since March 2015 on Wed­nes­day amid bets that a US in­ter­est-rate in­crease is im­mi­nent. Traders are pric­ing in a 100% chance the Fed­eral Re­serve will act next month.

Oil closed near $48 a bar­rel in New York af­ter Iraq’s prime min­is­ter said the coun­try will par­tic­i­pate in an OPEC pro­duc­tion re­duc­tion. Iraq will agree to bear part of an oil-out­put cut at the OPEC meet­ing next week, Prime Min­is­ter Haider Al-Abadi said. Pre­lim­i­nary talks ended on Tues­day with­out a de­ci­sion on the role of Iraq and Iran in a sup­ply deal. Crude stock­piles fell 1.26 mil­lion bar­rels last week, En­ergy In­for­ma­tion Ad­min­is­tra­tion data show.

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