European markets are heading into the weekend in positive fashion, with trade comments from Kudlow boosting sentiment. Meanwhile, Labour plans to nationalise some of BT has had a limited impact given the low chance of a Labour majority government. Finally, oil prices have failed to rise off news of a jump in demand for Q3, with expectations of lower demand and higher output in 2020. 

  • Stocks rise, following positive Kudlow comments

  • BT under pressure amid Labour plans to nationalise their network

  • Oil demand on the rise, yet glut lies ahead

European markets are trading in the green this morning, as renewed hopes over a phase one deal between the US and China lifted sentiment as we head into the weekend. Comments from White House economic advisor Larry Kudlow signalled an impending breakthrough in trade talks, yet this is the latest in a long line of optimistic Kudlow comments which have thus far proven ill-founded.  

Labour plans to nationalise the BT broadband network sent the firm lower in early trade, adding to the long list of firms under threat if Labour is successful in December. With the party planning to provide free fibre optic broadband via taxation of big tech firms, this proposal has a wide reach that would essentially wipe out the whole broadband business in the UK. However, with BT shares having recovered much of the early decline, there is a feeling that even if Labour enter government, they will likely be in a coalition that limits such radical spending proposals such as this. 

Oil producers received a boost in Q3 as demand for crude products doubled over the course of the quarter. While demand declines have been widely expected throughout 2020, this recent rise comes as a boon for producers who will be preparing for lower prices as the supply-demand dynamic shifts. The fact that much of this jump in demand comes from China provides a wider boost to sentiment, with a ramp up in the use of crude products largely associated with heightened economic activity. Nevertheless, 2019 crude demand is expected to show a decline over the year, which will widen the supply gap thanks to predicted growth in production from the US, OPEC, Brazil and Norway.

Ahead of the open we expect the Dow Jones to open 84 points higher, at 27,866.

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