European stock markets are broadly lower ahead of the FOMC announcement. Investors are holding back and markets are posting broad losses across countries and sectors, with Italy and France slightly underperforming. A slightly weaker Pound is helping the multinational laden FTSE 100 to limit losses, but after a narrowly mixed session in Asia and with little changes in U.S. stock futures which are without a clear direction as investors wait for the Fed.
Oil prices fell over 1.5% at their lows after weekly API data showed an unexpected 4.7-million-barrel rise in U.S. crude inventories. The median forecast had been for a 1.6 million decline. Aside from the data, an IEA report also highlighted that OPEC produced 34.2 million barrels per day in November, 500k more than the group pumped in October and contributing to the 98.2 million barrels per day rise in global supply versus October’s 96.95 million barrels per day production rate. WTI is presently off their lows but still showing a 1.4% decline, at $52.25. The earlier low was set at $52.09, which is the lowest level seen since last Friday. Immediate market focus is now the official weekly U.S. inventory data from EIA and the Fed’s policy announcement. Beyond this, the implementation phase of the agreed output cut by OPEC and non-cartel producers will start on January 1, where markets will closely monitor the degree of compliance.
UK Claimant Count Rose Less than Expected in November
UK jobless claimant count rose 2.4k in November, below the median forecast for a 5.5k rise and down from 13.3k in the previous month. The official unemployment figure for October remained unchanged at the cycle low of 4.8%, as expected. Household incomes unexpectedly rose, with the including-bonus figure for the three months to October lifting to a rate of 2.5% year over year, and the ex-bonus figure rising to 2.6% year over year.
DIW sees German growth falling back to 1.2% next year, impacted by calendar effects, with growth expected to rise back to 1.6% in 2018. The economic institute also said that Germany may face a slight budget deficit from 2018, with the government likely to struggle to achieve a budget surplus.
Italian HICP inflation was confirmed at 0.1% year over year, up from -0.1% year over year in the previous month. As in the rest of the Eurozone, higher energy prices played a key role, with transport costs up 0.7% year over year in November, versus 0.2% year over year in the previous month. This is only the second months this year that annual transport inflation is in positive territory and the data highlights that with oil prices moving higher, the risks to the inflation outlook are also tilted to the upside.
