Oil toils after worst month in a decade, Deutsche sinks DAX

Police vehicles are parked in front of Deutsche Bank headquarters as roughly 170 criminal police officers, prosecutors and tax inspectors searched Deutsche Bank offices in and around Frankfurt, Germany, November 29, 2018, on money laundering allegations, the public prosecutor said in a statement. — Reuters pic
Police vehicles are parked in front of Deutsche Bank headquarters as roughly 170 criminal police officers, prosecutors and tax inspectors searched Deutsche Bank offices in and around Frankfurt, Germany, November 29, 2018, on money laundering allegations, the public prosecutor said in a statement. — Reuters pic

LONDON, Nov 30 — Oil toiled at a more than one-year low after its worst month in a decade today, while most major markets were keeping moves tight ahead of a weekend meeting between US and presidents Donald Trump and Xi Jinping.

Europe’s main share indexes in London, Frankfurt and Paris all sank, and Wall Street futures were pointing down too after the latest batch of disappointing Chinese data had made for another twitchy Asian session.

Frankfurt’s export-heavy DAX and Britain’s domestic-focused FTSE 250 were both staring at their fourth consecutive month of falls.

For the DAX it is the worst run since the back end of 2008 and was made worse again as Deutsche Bank shares fell to an all-time low as police searched its headquarters for a second day in a money laundering scandal linked to the Panama Papers.



November’s real humdingers though have been oil and which have plunged 21 per cent and 18 per cent respectively, the worst month for either since the financial crisis a decade ago.

“Expectations at the start of the fourth quarter were for a melt-up in risky assets, but two of the biggest trends have been a reversal of some of the few returns we have seen this year, which have been in oil and in tech,” said head of macro strategy at State Street Global Markets’ Michael Metcalfe.

“Also the market seems to be going into the G20 meeting with very low expectations of a ceasefire in the trade war. That may very well be correct but politics has proved very hard to predict this year.”

Anticipation ahead of that meeting ensured cautious moves in the currency and markets.

The dollar index was a touch firmer at 96.86 .DXY — having slipped this back this week after Federal Reserve chief Jerome Powell left investors wondering whether the US may be nearing the end of its current rate-hike cycle.

In early afternoon London trade, the euro fetched US$1.1360 , down 0.25 per cent as euro zone data came in softer than forecast.

The dollar was flat at ¥113.52 while sterling shuffled around at just under US$1.28 having been lifted slightly this month by UK Prime Minister Theresa May securing a Brexit transition deal with the EU.

“We believe that Powell has not turned dovish but is simply toning down his hawkish tilt,” said Philip Wee, a currency strategist at DBS, forecasting another hike in December and as many as four next year.



US money markets though, where the real money sits, are now pricing in only one rise next year, and the yield on two-year US Treasury notes, sensitive to Fed shifts, is at 2.81 per cent from almost 3 per cent earlier in the month.

Argentine tango

Markets could well be in for a volatile December if Trump and Xi fail to de-escalate their trade war at talks at this weekend’s G20 meeting in Argentina.

Data today added to the anticipation, showing that growth in ’s vast manufacturing sector had stalled this month for the first time in more than two years.

“This is not a good year for multilateralism,” a German government source told Reuters about the prospects for a G20 statement at the end of the meeting on Saturday. The negotiations are “very, very difficult.”

MSCI’s broadest index of Asia- shares outside Japan ended down 0.2 per cent with Korean shares one of the main drivers after the country’s central bank lifted its interest rates in a widely expected decision.

In Japan, the Nikkei ended 0.4 per cent higher, while Chinese blue-chips, which have had a relatively steady month all considered, also advanced 1 per cent.

US S&P e-mini futures ticked down 0.3 per cent, pointing to a weaker Wall Street session today after a mixed overnight performance.



The Dow Jones Industrial Average fell 0.11 per cent, the S&P 500 lost 0.22 per cent, and the Nasdaq Composite dropped 0.25 per cent yesterday.

Boeing Inc, the single largest US exporter to China, dropped 0.9 per cent in premarket trading. Other trade-sensitive stocks including General Electric Co declined 2.6 per cent and Caterpillar Inc 0.2 per cent.

Adding to apprehension ahead of the Trump-Xi meeting, a US official said White House trade adviser Peter Navarro, who has advocated a tougher trade stance with China, would attend.

Trump himself had sent mixed signals saying: “I think we’re very close to doing something with China but I don’t know that I want to do it,” as the money coming in from his tariffs was so lucrative.

Back in the oil markets, crude was starting to slip again having tried to steady on news that Russia is increasingly convinced it needs to reduce along with the Organization of the Petroleum Exporting Countries (Opec).

Opec and its allies are meeting in Vienna on Dec. 6-7. Brent and US WTI crude were both down around 0.6 per cent at US$59.51 per barrel and US$51.38 a barrel. Spot gold barely budged at US$1,223 per ounce. — Reuters

Source: The Malay Mail Online







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