European markets steady on eve of US midterm vote

The German share price index DAX graph is pictured at the stock exchange in Frankfurt October 11, 2018. — Reuters pic
The German index DAX graph is pictured at the stock exchange in Frankfurt October 11, 2018. — Reuters pic

LONDON, Nov 5 — European stocks held steady today as cautious investors eyed the upcoming US midterm election, the resumption of Washington’s sanctions on Iran, and brewing fiscal fears in Italy.

After a flat opening, Frankfurt and London each added 0.2 per cent in late morning deals and Paris rose 0.1 per cent, but Milan shed 0.4 per cent on ongoing fiscal worries.

Global oil prices are meanwhile trading at multi-month lows after the US reimposed sanctions on Iran, which is the OPEC cartel’s second-biggest player after Saudi Arabia.

“European bourses opened flat today as traders keep their focus on US midterms on Tuesday, whilst questions over the Italian budget continue to impact risk sentiment,” said analyst Neil Wilson.

“Iran sanctions have come into force but it looks like oil prices have already factored in the impact on the market. Estimates about how much oil will be lost as a result of the measures have varied widely.”

‘Worst case scenario’ for markets

Traders are now eyeing tomorrow’s US mid-term elections, which are seen as a vote on President Donald Trump’s performance since taking the White House, with the Democrats looking to take control of the House of Representatives.

A win for them could also raise the chances of Trump being impeached, according to some analysts.

“The results of Tuesday’s US midterm elections will decide which party controls the House and Senate,” noted FXTM analyst Hussein Sayed.

He added that the “market’s worst-case scenario would be the Democrats controlling both houses as future fiscal policy trajectory becomes uncertain — and the probability of Trump’s impeachment intensifies.”

Oil prices meanwhile slipped as Washington reimposed sanctions on Tehran but with a number of countries including India, Japan and possibly being given waivers to continue buying from the country.

Adding to the downward pressure are expectations that major producers Saudi Arabia and Russia will ramp up their own exports to make up for the shortfall from Iran.

In early morning deals, New York crude sank to a seven-month low at US$62.52 (RM261) per barrel.

Before the weekend, oil had touched a 2.5-month trough at US$72.16 on Friday.

Asian stocks stumble

Asian bourses meanwhile fell Monday after Trump’s top economics adviser downplayed the chances of a quick deal to end the China-US trade war, taking the wind out of the sails of last week’s rally.

The US leader had fuelled a surge in the region’s Friday by tweeting that he had held positive talks with President Xi Jinping, before a report said he had even asked officials to draw up a draft bill with an eye on a potential agreement.

But White House adviser Larry Kudlow later tempered expectations, telling CNBC “there’s no massive movement to deal with trade”.

The news had sent into the red on Friday as investors shrugged off impressive US jobs data.

Key figures around 1145 GMT

London — FTSE 100: UP 0.2 per cent at 7,110.29 points

Frankfurt — DAX 30: UP 0.2 per cent at 11,538.23

Paris — CAC 40: UP 0.1 per cent at 5,109.50

Milan — FTSE MIB: DOWN 0.4 per cent at 19,312.34 

EURO STOXX 50: UP 0.3 per cent at 3,223.36

Tokyo — Nikkei 225: DOWN 1.6 per cent at 21,898.99 (close)

Hong Kong — Hang Seng: DOWN 2.1 per cent at ,934.39 (close)

Shanghai — Composite: DOWN 0.4 per cent at 2,665.43 (close)

New York — Dow: DOWN 0.4 per cent at 25,270.83 (close)

Euro/dollar: UP at US$1.1378 from US$1.1338 at 2100 GMT on Friday

Pound/dollar: UP at US$1.2997 from US$1.2970

Dollar/yen: UP at 113.26 yen from 113.20 yen

Oil — Brent Crude: DOWN 12 cents at US$72.71 per barrel

Oil — West Texas Intermediate: DOWN 36 cents at US$62.78 — AFP

Source: The Malay Mail Online

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