European Open Quiet trading in anticipation of a big week

The FTSE drifted lower across Monday’s session, with losses accelerating following a softer open on Wall Street. Concerns over a slowdown down in China overshadowed the end of the US government shutdown putting the UK index in line for its fifth straight negative close.

Oil Slides
Among the fallers were oil majors, BP and Shell as they traced the price of oil lower. After the Venezuela crisis boosted oil prices last week, Brent and WTI were on the decline. Brent traded 2.4% lower targeting $60 per barrel and WTI dived 3%, through $52 amid signs that oil output could be on the up. The US Baker Hughes rig count rose for the first time in 2019 a sure sign that drillers will increase production in the region. 

With supply set to increase imminently and demand looking shaky as global growth concerns continue to linger, the bears have good reason to remain in control. Even with the Venezuela crisis brewing and potential US sanctions on the Latin country traders are responding to the data rather than the possible whims of Trump.

Oil prices could find themselves moving higher later in the week should Fed Chair Jerome Powell sound dovish in the press conference following the Fed rate decision. Traders will also be watching developments in Washington as officials from China arrive to resume trade talks. Signs of progress could give oil a lift higher. However, with Chinese, industrial profits data once again lower, signs of stagnation in the talks could send oil crashing lower.

Big Week for US earnings
Around a quarter off S&P companies and nearly half of stocks on the Dow report earnings this week as earning season steps up a gear. Bellwether Caterpillar started the ball rolling, reporting earnings that sent a chill through the market. The industrial giant provided evidence of just how the economic slowdown in China is impacting on industrial firms. Caterpillar sorely disappointed by saying that it expected no growth in sales in the country this year and only a modest increase in sales growth worldwide. Investors are hoping this is not the start of a terrible week for earnings.

Pound Eases Back Ahead of Tuesday’s Brexit Vote
After a strong week last week, the pound was easing back in trade on Monday as investors look ahead to tomorrow’s Plan B Brexit vote in Parliament. Theresa May’s deal faces a series of votes in what could change the course of Brexit. Depending which of the two rival sides wins as to whether Brexit will be delayed or whether Theresa May will be sent back to Brussels for further negotiations. The uncertainty of what happens next kept traders on the side-lines and the pound out of favour.