European Market Comment Dec 23

• European markets are set to open broadly flat this morning while the FTSE 100 is called to open lower.
• The France-UK border is being reopened today after being closed for 48 hours over fears about a new strain of the virus, while Brexit talks rumble on.
• In commodities, oil prices continued to slide to hit their lowest level in two weeks.

FTSE 100 to open lower

The FTSE 100 is set to open 0.2% lower at 5440.8 after ending yesterday’s trading session at 6451.8.

European indices to open broadly flat

Germany’s DAX is set to open a smidgen higher at 13415.0 from 13405.6, while France’s CAC 40 is set to open slightly lower at 5469.6 from 5472.3.

Start trading the opportunities with indices today.

8 days until Brexit  

UK prime minister Boris Johnson and European Commission president Ursala von der Leyen have spoken over the phone in an effort to break the Brexit deadlock, with just 8 days to go until December 31.

Talks could continue beyond Christmas, but both sides are reported to be trying to strike an agreement by the end of today to ensure there is time for both sides to ratify any deal before the end of the year.

Michel Barnier, the EU’s chief negotiator, told ambassadors of member states yesterday that the latest offer made by the UK on fisheries was unacceptable.

France to reopen border with UK

The border between France and the UK is set to be gradually reopened today after being shut to prevent a new strain of the coronavirus found in the UK spreading further afield. Hauliers and EU citizens trying to get home for Christmas will be able to start crossing the border so long as they have a negative COVID-19 test within 72 hours of travelling.

That follows the European Commission’s advice to EU countries to lift the travel ban on the UK but insist people have negative tests or quarantine for 10 days, although individual states still have the final say on their own border restrictions.

UK business activity takes another hit during lockdown

Data released early this morning by the Confederation of British Industry showed the balance of companies reporting growth in the three months to December slipped to -21 from -16 a month earlier, as new lockdown restrictions took its toll. Still, it remains well above the -71 reported at the depth of the crisis in June.

Separate figures from the Society of Motor Manufacturers and Traders (SMMT) said British car production was 1.4% lower in December compared to November. While this is a mild month-on-month decline, production year-to-date is down a staggering 31%.

President Trump threatens not to sign new stimulus package

US president Donald Trump has stunned markets by threatening not to sign an $892 billion coronavirus relief package that was agreed by lawmakers earlier this week. The package is attached to a wider bill designed to supply more funding to federal governments before existing funds run out on December 28.

Trump’s main problem with the bill is the amount to be paid directly to American adults. The package has agreed on payments of $600 per adult, but Trump is insisting on $2,000. However, Democrats appear open to the idea considering they were pushing for more money for citizens during negotiations in the first place.

If the bill needs to be amended then it will need to be passed by the House and the Senate again, which makes for a tight timeframe if the country is to avoid a full or partial government shutdown when existing money runs out.

Cairn Energy wins tax dispute with Indian government

Cairn Energy has won an international arbitration case against the Indian government over a tax dispute, according to reports from Reuters. The dispute has gone on since 2015, when the government claimed the company owed $1.6 billion in taxes from its Indian operations.

Forex: Pound and euro gain ground on dollar

GBP/USD traded at 1.34100 in early trade, up 0.4% from 1.33621 at the end of play yesterday.

EUR/USD was up 0.2% at 1.21844 from 1.21632.

Meanwhile, as Brexit talks continue, EUR/GBP traded at 0.90863, down 0.2% after ending Tuesday at 0.91039.

Start trading the opportunities in the forex market today.

Commodities: Oil prices hit two-week low

Oil prices have continued to slide as markets fear surging coronavirus cases and a new strain could hamper demand for oil going forward.

Brent traded at $49.53 in early trade, edging down to a two-week low after ending yesterday’s session at $49.82, while WTI also fell to $46.32 from $46.79.

Start trading the volatility in oil markets today.

Gold traded at $1863 per ounce this morning, slightly higher than $1860 yesterday.

Start trading the opportunities in the gold and silver market today.

Market-moving events in the economic calendar

The US takes centre stage in the economic calendar today, with core personal consumption, personal spending, initial jobless claims, and durable goods orders at 1330 GMT, followed by Michigan consumer sentiment and new home sales at 1500 GMT.

There is also Canada’s GDP numbers at 1330 GMT and Switzerland’s SNB quarterly bulletin at 1400 GMT.

Look at all the scheduled events for today using our economic calendar, and stay up to date with the latest news and analysis here.