Joshua Mahony MSTA
Scope Markets
Trump keeps the pressure on risk assets, with the FTSE tumbling once more amid a sharp spike in volatility. With crude seeing a volatile 24-hours, the week has gone from mundane to insane.
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FTSE selloff continues amid risk-off environment
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Crude slides after OPEC and IEA reports
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US CPI in focus
The FTSE has carried on where it left off on Thursday, with yet another day of risk-off sentiment seeing investors shift out of equities. The UK headline index has crashed to the lowest level since late-June, in a week which has turned from mundane to insane. For a week that has been largely devoid of major economic releases, Donald Trump’s confrontational stance with North Korea has raised volatility across the board, pushing the VIX from a rock bottom sub-10 reading on Tuesday, to the highest level in almost a year.
The oil market has seen a tumultuous 24-hours, with the price boost seen in the wake of yesterday’s OPEC upward revision to demand estimates proving short-lived. Ultimately, we continue to see OPEC production rise, with compliance falling to 75% thanks to nations such as Iraq (34%), Venezuela (28%), and UAE (53%). However this morning has seen the IEA lowering its demand forecasts for 2018, with India and China expected consume less than previously expected.
Amid the flight to safety, investors have precious few economic events to impact their investment decisions. However, with the US CPI inflation reading due up in the afternoon, we will get another insight into whether the economic environment may continue to push the Federal Reserve towards more monetary tightening in the fourth quarter.
Ahead of the open we expect the Dow Jones to open 14 points lower, at 21,830.
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