Danske Research Team
Danske Bank A/S
Market movers today
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There are not many data releases in the calendar today. Focus will most likely be on the developments in the oil markets where prices have fallen back significantly over the past month. The sharp falls are weighing on global risk sentiment and therefore have been setting off significant movements in financial markets in the past days.
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In the UK, focus remains on the political situation with the Queen's Speech (which out lines the government 's legislative agenda for the coming parliament ary session) taking place today (despite Theresa May not having agreed on a deal with the Democratic Unionist Party (DUP) yet ).
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In the Scandi region, focus will be on Norwegian unemployment figures and Swedish economic survey numbers this morning.
Selected market news
U.S. stocks retreated last night from all-time highs as crude oil slid into a bear market on concern the global supply glut will persist. This morning Asian equity markets are also in the red with notably energy dependent Australian equity markets being pushed lower by 1.5%. The only exception being mainland Chinese shares after they were added to MSCI's emerging markets index.
After heavy falls over the past days, oil prices are fairly stable this morning in Asian trading. The Brent oil price is trading just short of USD 46 per barrel which is the lowest level since early November, when US president Trump was just elected. Headlines focus on higher supply from Libya, but in our view the important story in the oil market now is one of weakening demand. Interestingly, API data showed rising gasoline stocks and falling crude stocks. The political turmoil in the Middle East will also be in focus, especially after this morning's news of a reshuffle of the Crown Prince in Saudi Arabia. The weak oil price is also weighing on currency markets, with oil-dependent oil currencies such as the NOK, AUD and RUB feeling the pinch (for more on NOK ahead of the Norges Bank meeting tomorrow, please see the FX section), while the JPY is seeing support on the back of weak global risk sentiment . Meanwhile, the USD is seeing strength overnight as Fed officials yesterday continued to reiterate a moderately hawkish stance on monetary policy.
Focus will also be on the UK today where the Queen's Speech is held in the UK parliament. The speech is given at a time when Theresa May is struggling to strike a deal with the DUP on a new government programme. It will therefore be interesting to see what priorities are highlighted in the speech. Meanwhile, the GBP had a difficult overnight session after BoE Governor Carney said now is not the time to hike, effectively slapping down the three hawkish dissenters who voted for a hike last week and S&P Ratings said they are most likely to cut the UK's rating, and that it will not have to wait to see the terms of the final Brexit deal before doing so. We note that all three ratings agencies have the UK on out look negative. Moody's still assigns a triple-A rating, while S&P and Fitch are two notches below that .
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