Oil prices continue to fall

Market movers today

• We have another quiet day today in terms of data releases. The single most important event is President-elect Donald Trump's press conference in New York City, which is expected to be held at 17:00 CET (we have not been able to confirm this). Hopefully, we will get more details on what to expect from the new Trump administration, although we do not know exactly what he is going to talk about. We will listen carefully for any comments on fiscal policy, trade policy, the Homeland Investment Act 2 and border adjustment taxes.

• The main event in the European markets today, given very little economic data, will be the Italian constitutional court's ruling on the labour market reforms implemented by the old PM Matteo Renzi – see also the Fixed Income section on the next page. 

• In terms of data releases, focus is on the UK, as industrial production and construction output data for November as well as the NIESR GDP estimate for Q4 are due out. UK PMIs have risen in recent months in line with global PMIs, suggesting that the UK economy continues to be resilient to Brexit uncertainties. It is still our view that growth will slow this year due to Brexit uncertainties and higher inflation.

Selected market news

In the US yesterday, the NFIB small business optimism index rose 7.4 index points (the most since 1980) to 105.8, which is the highest level in 12 years. Since October before the election, the optimism index has risen close to 11 index points, so the increase is quite significant. Looking at the subcomponents, small businesses expect higher sales, more investments and higher employment. The reason behind the large increase is the Trump victory, as many small businesses expect Trump to loosen regulation and lower taxes significantly – it did not take long before Trump noted the surge on Twitter. The higher optimism among small businesses comes on the back of a jump in consumer confidence, which is at the highest level since August 2001, so both consumers and companies are excited by the upcoming Trump presidency. We still do not know much about how President-elect Donald Trump will act as President, but we see a risk that corporates and consumers may be disappointed, as his actual policy is likely to be more modest than suggested during the election campaign.

Intel chiefs have presented President-elect Trump with claims of Russian efforts to compromise him. According to sources, the Russians should be in possession of compromising personal and financial information about Trump, see also the CNN story. Donald Trump has called it ‘fake news' on Twitter.

Oil prices continue to fall yesterday and went below USD54/bl. Along with the lower-thanexpected Norwegian inflation figures, the decline in the oil price pushed EUR/NOK up to 9.08 – the highest level since the beginning of the year. In our view, Norges Bank will not be too concerned with the decline in inflation and thus it does not change our view that EUR/NOK should head back below the 9.00 level in the short term as NOK remains supported by valuation, economic growth and real rates.