Markets with mood swings | Calamatta Cuschieri

Stumbling markets, Anglo-US relations & strong oil prices

Trump's and May's first meeting since clashing over the US president's retweets of far-right videos in November
Trump's and May's first meeting since clashing over the US president's retweets of far-right videos in November

US markets advanced on Thursday, buoyed by solid corporate earnings and continued weakness in the dollar after comments by European Central Bank President Mario Draghi and U.S. Treasury Secretary Steven Mnuchin. Wall Street opened at fresh records, but quickly lost momentum only to recover lost ground later in the session. The Dow Jones industrial average gained 200 points on the back of stronger-than-expected quarterly results from Caterpillar and 3M.. The S&P 500 rose 0.3 percent, with materials as the best-performing sector. The Nasdaq composite advanced 0.4 percent.

European stock markets took off strong but erased earlier gains and turned firmly lower, yanked lower by a euro rally after the European Central Bank said eurozone growth was surprisingly strong and offered only limited pushback against the Trump administration’s embrace of dollar weakness. The Stoxx Europe 600 fell 0.6% to end at 398.60, its lowest close since January 17.

Trump – May companionship

In a series of warm exchanges in Davos, Switzerland, US President Donald Trump predicted a "tremendous increase" in UK-US trade, after talks with British Prime Minister, Theresa May. It was their first meeting since clashing over the US president's retweets of far-right videos in November. The two leaders met at the World Economic Forum, with post-Brexit trade relations between the two countries high on the agenda.

Mr Trump said: "One thing that will be taking place over a number of years will be trade. Trade is going to increase many times.” A Downing Street spokesman said the two leaders had also discussed the Bombardier trade dispute and that Mrs May had "reiterated" the importance of the firm to Northern Ireland, Iran, Syria and Brexit negotiations. She added, "Alongside that working for a good trade relationship for the future which will be for both our benefits, so the UK and the US both do well out of this - and it's been great to see you today."

Crude strength

Oil rose on Thursday, with global benchmark Brent surging above $71 a barrel for the first time since 2014 on support from a weaker U.S. dollar, tighter global supplies and a record run of declines in U.S. crude inventories. U.S. crude climbed to $66.66, also the highest since early December 2014, before dipping to $66.04, up 43 cents.

A falling dollar makes dollar-denominated commodities cheaper for other currency holders and tends to support oil prices, marking the theme for most markets today. Recent supply cuts led by OPEC and Russia have kick started recoveries seen in oil prices, however they have been somewhat offset by growing output of U.S. shale oil, as higher prices have encouraged more investment in expanding supplies.

Disclaimer:

This article was issued by Peter Petrov, Junior Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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