On Thanksgiving eve US data disappoints, OPEC reveals its stubbornness

On the precipice of the OPEC summit the participants of the Mexican stand-off that is currently being played over the body of Brent Crude oil refused to blink.

Saudi Arabia claimed that a cut in oil production is unnecessary as it waits for the market to ‘stabilise itself’, whilst Iran Iran Oil Minister Bijan Zangeneh argued that non-OPEC members, like Russia and the USA, need to participate if any proposed cuts go ahead. Needless to say, oil has responded to this ongoing uncertainty poorly, sinking further below the $80 per barrel level to an intraday low of $77.31.

The FTSE had another quiet day after its strong performance last week as CBI realized sales figures hinted at a disappointing Christmas for UK retailers. This consumer spending indicator came in at 27, one point less than predicted, and lower than last month’s 31. Much like the weak US consumer confidence numbers yesterday, this UK figure comes at an awful time, as retailers gear up for what is meant to be their most successful period of the year. Following these figures, and this morning’s stable GDP announcement, the FTSE lingered around the 6720s, 15 points lower than the day’s open, after reaching its peak price for the day within its first hour of opening.

As the FTSE cowers and plays it safe, the DAX is milking the positive sentiment that sprung up around Europe at the end of last week for all its worth. After the very slight movements towards stimulus in Europe this morning, the German index hit intraday highs of 9946, with futures pointing towards a close of 9910. The DAX is now trading at highs not seen since September; it seems at the moment that just the slightest whiff of ECB intervention is providing big boosts to the German markets.

As the DAX soars, the euro has had decidedly mixed reactions to the increasingly likely QE implementation. Against the dollar, the euro rose 0.2% today to 1.2508, whilst against the pound it fell 0.4% to 0.7897. Whilst QE would, in theory, provide a major boost to the Eurozone economies, currency tends to fair worse, as evidenced with the difference between the Nikkei and the yen following the Bank of Japan’s QE at the start of the month.

Finally, as the US markets have one eye on tomorrow’s turkey, the US released a flurry of data that was nothing to be thankful for. Core durable goods orders fell to -0.9% instead of the forecast 0.5%, whilst the core PCE price index came in at -0.2%, less than last month’s 0.1%, and a continuation of the poor consumer figures from yesterday. Unemployment claims rose to 313,000, much higher than the 287k predicted, and the 292k seen last week, as new home sales fell 9000 to 458k.

This bundle of disappointing data caused the Dow Jones to open at 17,812.25, lower than yesterday’s close. As has been seen, this weak opening will not necessarily prevent the Dow from closing at another record; however the index isn’t invincible, and there will be a limit to the amount of poor data it can withstand. The Dow will be relishing its day off tomorrow.