Oil finds floor, stocks ease on weak data
European shares hit two-week low but pare some losses, sterling waivers on Brexit woes
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Oil prices bounced from multi-month lows yesterday but stocks fell as disappointing data heightened worries over slowing global growth, while the pound wavered as Prime Minister Theresa May faced the hard task of selling her Brexit deal.
European shares hit a twoweek low after data showed the German economy contracted for the first time since 2015, tracking similar losses in Asia where data in Japan and China underscored worries about weaker growth.
They later pared some losses after reports said Opec and its partners were discussing a proposal to cut output, helping oil prices reverse opening losses and putting an end to their longest losing streak in decades.
The MSCI’s world equity index remained on track for its fifth day of losses in a row, but reduced its decline to 0.1 per cent by 1243 GMT.
The pan-European STOXX benchmark index was down 0.2 per cent, while US stock index futures pointed to a flat open.
Sterling fell from the 7-month high versus the euro and eased below $1.30 (Dh4.77) in volatile trading after being boosted from news that Britain and the European Union agreed on the text of a Brexit divorce deal.
Although sterling softened from peaks hit in the previous session, investors were anticipating wild swings ahead for the British currency. Sterling/dollar implied overnight volatility jumped to 23 per cent, its highest since a general election in June 2017.
No-deal situation
“We are cognisant that the recent provisional deal is only a step in the right direction and if it does not pass the meaningful vote the opposite scenario is likely to play out,” said Richard Larner, Head of Research at Brooks Macdonald. “In this event, investors will begin to price a no-deal situation into investment markets,” he added.
Meanwhile, oil attempted to rebound after plunging around 7 per cent the previous session, with surging supply and the spectre of faltering demand scaring off investors. Oil prices rose yesterday, after Tuesday’s 6.6 per cent drop, the largest one-day loss since July. Brent crude was trading at $67.47, up 3.05 per cent, while WTI was at $57.29, up 2.89 per cent.