Eventful week with OPEC meeting and Non-Farm payrolls
We start this eventful post US holiday week with a Cyber Monday and futures pointing sightly down. It is a big week for US data with November jobs report on Friday and a testimony of Jerome Powell and Steven Munchin on Cares Act on Tuesday. The significant news is on OPEC not reaching an agreement on January oil-output increase delay in informal discussions on Sunday and UK officials claiming to be very close to the deal if EU moves on fishing.
U.S. stocks pared gains to trade little changed in thin post-holiday volume as investors assessed valuations with pandemic still raging in parts of Europe and the U.S on Friday. The S&P 500 hovered near an all-time high after rallying 11% in November. This morning Dow is trading 0.13% higher at 29,910.37 and S&P500 0.24% up at 3,638.35. US Dollar is drifting lower with Dollar Index down 0.1% at 91.705. Given the absence of new fiscal stimulus, Federal Reserve is expected to step in with more bonds buying on the next meeting in December. The jobs report on Friday is expected to show a seventh straight month of jobs gains with 500k jobs added and unemployment ticking down from 6.9 to 6.8%.
European stock markets are opening lower on Monday pausing for a breath at the end of the strong month. Dax traded 0.48% lower, CAC40 0.38% lower, but FTSE slightly higher 0.2%. Positive vaccine news resulted in major gains this month with DAX gaining 15%, CAC 40 more than 20% and FTSE up 14% in November. Although vaccine is very near, European countries are facing further restrictions and disquiet over Christmas period over rising number of cases. Brexit deal appears very near with Raab saying a deal can be done if EU moves on fishing rights. Eurozone inflation data on Tuesday is expected to show a drop of 0.2% year on year. The data is expected to underline the need for more stimulus ahead of ECB December policy meeting. The ECB signalled in October it would further ease its monetary policy in December, which has underpinned euro zone government bonds in recent weeks. The moves have been muted since bonds recovered from a sell-off on optimism around COVID-19 vaccines. The benchmark German 10-year government bond yield was last unchanged at -0.58%, after touching its lowest in nearly three weeks at -0.595%.
Oil retreated amid rising tensions among OPEC+ members. OPEC is set to start the formal two-day meeting on Monday, but so far failed to agree the delay in output increase in informal discussions on Sunday. US Crude futures traded 1.8% low at $44.82.
Gold has lost nearly 15% form its August record high and is opening lower this Monday at $1,778.45/oz which is another 0.5% lower. The move was largely attributed to vaccine optimism.
Asian markets opened slightly lower with MSCI broadest index slipping 0.4% and Nikkei 225 easing 0.4% despite of factory activity in China beating forecasts in November. Same as in Europe both indices had significant gains in November, with MSCI up 11%, which is best monthly performance since 2011, and Nikkei 225 up 15.4%. In China, data showed profits at industrial enterprises surged at the fastest pace in a single month in almost nine years in October, a further sign the country’s economic recovery is gathering pace.
In Russia the Russian opposition leader Alexei Navalny has called on the EU to impose sanctions on Kremlin-linked Russian oligarchs. The ruble fell most among emerging market last week. Yield on 10-year bond was little changed on Friday. Ruble is expected to be volatile this week due to OPEC meeting on oil production.