Sharechat Logo

While you were sleeping: Euro rallies, Carillion collapses

Tuesday 16th January 2018

Text too small?

The euro strengthened to a three-year high amid optimism about economic growth in the European Union, the currency’s rise weighing on the region’s equities, notably those of exporters. 

The euro rose as high as US$1.22965, the highest level since December 2014.

Indeed, hedge funds and other speculative investors have amassed the heaviest long positions on the euro ever, Bloomberg reported, citing the latest Commodity Futures Trading Commission data, amid bets on a September end to European Central Bank stimulus.

Meanwhile, economists in a Bloomberg survey upgraded their 2018 outlook for euro-zone  growth to 2.2 percent, close to the decade-high 2.4 percent pace estimated for last year. 

Euro-zone money markets now price in a 70 percent chance of a 10-basis-point interest rate increase by the European Central Bank by the end of the year, up from 50 percent a week before, according to Reuters.

On Monday US financial markets were closed for Martin Luther King Jr Day. Last Friday, Wall Street's three benchmark indexes each closed at record highs. Investors will eye the results from a slew of US companies this week including Goldman Sachs, Bank of America, Citigroup, Morgan Stanley, IBM and American Express to assess valuations. 

In Europe, the Stoxx 600 Index ended the day with a 0.2 percent decline from the previous close.

The collapse of Carillion, one of the UK government’s top contractors that employs about 43,000 people worldwide, weighed on sentiment. 

”People are looking at possible winners from this [but] in the short-term, it’s a pretty grim day for the UK construction sector,” James Tetley, deputy head of research at N+1 Singer, told Reuters. 

The UK’s FTSE 100 index fell 0.1 percent, France’s CAC40 Index moved 0.1 percent lower, while Germany’s DAX Index shed 0.3 percent. 

Commodities including oil and gold rose, supported by a decline in the US dollar.  

Bank of America Merrill Lynch on Monday upgraded its 2018 Brent price forecast to US$64 a barrel, up from US$56, forecasting a deficit of 430,000 barrels per day in oil production compared to demand this year, Reuters reported. 

To be sure, Citigroup, Societe Generale, and JMorgan Chase predict the coalition of oil producers may begin winding down their supply cuts from the middle of the year, before the agreement’s scheduled conclusion in December, according to Bloomberg. The producers are nearing their goal of clearing an inventory glut, and rising prices risk encouraging rival supply, Bloomberg reported. 

“There could be an agreement over the summer on ramping production back up,” Ed Morse, head of commodities research at Citigroup in New York, told Bloomberg. 


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares drop 1% on global selloff, led by Synlait, Sky TV; CBL meeting delayed
Global appetite for NZ yield stocks on 'pause', Harbour Asset's Bascand says
Green Acres models 24/7 on-demand cleaning service on Uber
Ponzi scheme operator Hibbs sentenced to 8 years jail over $17.5M fraud
NZ dollar ekes out small weekly gain as investors fret about possible trade war
CBL watershed meeting deadline extended, Goldman Sachs hired as adviser
Tait Communications wins contract to upgrade London bus fleet
Still a healthy diagnosis
Auckland Airport sees 92% surge in Chinese tourists in February as annual figures hold strong
Allied Farmers to net $441,137 for receivable as PVL liquidator drops suit against directors

IRG See IRG research reports