Euro

European stock markets lead in the south. The repeat vote for the U.S. tax bill might be considered as a formality, but some people think it has shown Trump’s attempts to go through the agenda of his reform. It’s obvious that U.S. stock futures move higher constantly, but the strong Euro and Pound rise on Wednesday saw the FTSE 100 losing ground and contributed to pressure on stock markets.

The ECB is halting the asset purchases for the holiday season liquidity and is drying up in Eurozone markets. That adds to pressure, the Spanish IBEX is down ahead of a regional vote in Catalonia tomorrow. It is returning political risks to the forefront in the background of current political debates in Germany. The investors start to be worried about the general election in

European stock markets – Italy next year. Oil prices are increased, thus, the front end Nymex future is currently trading at a price $57.76/barrel. WTI futures are also increased and the price is $57.88. Crude prices gain 2% weekly and gained 7.5% in total since the beginning of the year.

API data showed 5.2 million barrel decline in U.S. crude inventories in the latest week to December 15, what is bigger than expected. After that firmer prices have come. This also contributed to compensation of the US crude supply expectations to increase to record levels over 10 million barrels a day in the months ahead. This approximately matches near Russian’s 11 million barrel a day production level and production out of Saudi Arabia.

German Producer Prices Dropped in November

German producer price inflation dropped to 2.5% year by year in November from 2.7% year by year in the previous month; the prices up 0.1% month by month, which is a bit lower than an expected number. Food price inflation decreased significantly, from 4.2% year by year to 3.4% year by year. This helped balance significantly a splash of energy price inflation, i.e. annual heating prices increasing 20.3% year by year. However, the rate remains surely above the objective of the ECB for price stability, remaining at 2.5% year by year. Mario Draghi will have something to argue with thanks to the decrease in the headline rate.

The current account positive European stock markets balance of the Eurozone lowered from 37.8 billion Euro in September to 30.8 billion Euroin October. According to unadjusted figure, that was only a part of a trend with the positive balance lowering from 367.8 billion Euro in the year to October 2016 to 252.0 billion Euro in the 12 months to October.

It’s even more noteworthy, that the unadjusted account shows a sharp decrease in both direct and portfolio investment inflows from 105.2 billion Euro in the 12 months to October last year to 423.2 billion Euro in the year to October. The significant net outflows in direct investment in debt instruments and in portfolio investment in equities took place.

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