Germany on the brink of recession, UK consumer confidence improving

A quiet end to the week draws to a close with European indices treading water and economic data highlighting the challenges facing the bloc.

Nowhere is that more evident than in Germany which appears to be on the brink of a double-dip recession and facing immense uncertainty over its budget for next year as it scrambles to patch up finances for this one.

A supplementary budget next week alongside a proposal to suspend the debt brake now looks likely but even this is just a temporary solution that won't give investors much confidence in the outlook for an economy already under significant strain.

The economy was confirmed to have contracted by 0.1% in Q3 this morning and as we move into the final month of Q4, it's looking likely data early next year will confirm the country is back in recession.

The Ifo business climate survey was a little better and appears to be turning a corner which is hopefully a good sign but at 87.3, it's still printing figures near historical lows. The early months of the pandemic were understandably much worse, as you'd imagine, but that aside, recent readings have fallen close to 2001 and 2009 levels. ​

UK consumers buoyed by improving real earnings

UK consumer confidence is also gradually improving, albeit from very weak levels. At -24, the Gfk survey is 25 points from last September's lows but still some way below all surveys from mid-2013 through to the pandemic. Still, the direction of travel is more promising and inflation is now running below wage growth which should continue to support that.

Trading calm going into the weekend after OPEC+ postponed meeting

It could have been a nervy end to the week in oil markets had OPEC+ not pushed back its meeting from this Sunday to next Thursday. Instead, it's all looking a little calm. While I wouldn't be entirely surprised to see leaks or comments over the weekend that still have an impact on the oil price on the open next week, the actual meeting now occurring Thursday could put traders' minds somewhat at ease.

Gold not giving up on $2,000 yet

Gold is continuing to flirt with $2,000 despite repeatedly failing to break and hold above the psychological resistance zone. We saw that on a number of occasions at the end of October and again earlier this week, buoyed on this occasion by a less hawkish Fed and favorable inflation and jobs reports from the US. It will be interesting to see how explosive the move is if the price does break significantly above, with it having taken some effort to break down. A rebound lower on the other hand could set up an interesting battle at the November lows around $1,930.