European equities little changed
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.