European stocks rebound from big selloff as oil slumps
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LONDON: European stock markets rebounded on Tuesday (Nov 13) from the previous day's selloff, with Wall Street boosted by earnings optimism and Europe holding up despite headwinds from Brexit talks and Italy's budget.London, however, underperformed after the EU published contingency plans for a "no-deal" Brexit, piling pressure on Britain as Prime Minister Theresa May scrambles to unite her government behind an agreement.
European "stock markets are higher ... as sentiment is slightly more optimistic despite the political risks", said David Madden, market analyst at CMC Markets UK.Reports just after the London closing bell said that a Brexit deal had been agreed on a "technical level" and would go before the British cabinet on Wednesday.Oil prices slumped meanwhile after US President Donald Trump urged producing nations not to cut output.Equities on both sides of the Atlantic had tumbled Monday, with Frankfurt shedding nearly two per cent amid concerns over Tuesday's EU deadline for Rome to revise its 2019 budget, and the Dow losing more than two percent as doubts were raised over Apple iPhone sales.
But Tuesday, the mood was more chipper, as positive earnings guidance from US retail company Home Depot lifted sentiment in New York trading and Nasdaq-listed Apple rebounded.There was also talk of resumed trade talks between the US and China which "may help ease some of the sting of festering trade concerns", said analysts at Charles Schwab.'ON EDGE' OVER ITALYIn foreign exchange, the euro recovered from a 17-month low of US$1.1216 seen at the start of the week.
Earlier in Asia, shares in technology firms slid, tracking a deep sell-off on Monday in New York after Apple was hammered, while energy firms also fell with oil prices.Back in Europe, Britain reported a pick-up in wage growth, boosting the pound and offsetting news of a slight increase in unemployment.Italy's populist government was set on Tuesday to defy the European Commission, preferring to risk financial sanctions than revise a big-spending budget, and putting stock traders "on edge", Madden said.The coalition had been given time to change its 2019 plans but insists an anti-austerity approach will help kickstart growth in the eurozone's third largest economy, and consequently reduce the public debt and deficit.But Brussels forecasts Italy's deficit will reach 2.9 per cent of Gross Domestic Product in 2019 and hit 3.1 per cent in 2020 - breaching the EU's 3.0 per cent limit.In the oil market, crude futures fell sharply on Tuesday.The commodity enjoyed a healthy rise Monday after Saudi Arabia called for a global output cut of one million barrels per day and unveiled plans to trim its own production by 500,000 barrels from December.However, Trump later hit out at the announcement in a tweet calling for prices to go lower."Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!" he wrote.Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!— Donald J. Trump (@realDonaldTrump) November 12, 2018
OPEC on Tuesday trimmed its global oil demand growth forecasts for this year and next, as kingpin Saudi Arabia tries to cut output to bolster prices in a weakening market.Crude has been torpedoed since hitting four-year highs last month as dealers fret about oversupply, weakening demand and worries about the impact of the China-US trade war.Signs of a softer-than-expected impact from US sanctions on Iranian crude exports have also weighed on prices in recent weeks.Key figures around 1640 GMT:London - FTSE 100: FLAT at 7,053.76 (close)Frankfurt - DAX 30: UP 1.3 per cent at 11,472.22 (close)Paris - CAC 40: UP 0.9 per cent at 5,101.85 (close)EURO STOXX 50: UP 1.0 per cent at 3,225.20New York - Dow: UP 0.2 per cent at 25,429.64Tokyo - Nikkei 225: DOWN 2.1 per cent at 21,810.52 (close)Hong Kong - Hang Seng: UP 0.6 per cent at 25,792.87 (close)Shanghai - Composite: UP 0.9 per cent at 2,654.88 (close)Euro/dollar: UP at US$1.1284 from US$1.1218 at 2200 GMT FridayPound/dollar: UP at US$1.3024 from US$1.2848Dollar/yen: UP at 114.03 yen from 113.85 yenOil - Brent Crude: DOWN US$3.11 at US$67.01 per barrelOil - West Texas Intermediate: DOWN US$2.70 at US$57.23 per barrel
Source : https://www.channelnewsasia.com/news/business/european-stocks-rebound-from-big-selloff-as-oil-slumps-10927802