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Fizz goes flat

Published Tuesday, October 27th, 2015

The fizz which buoyed global stock indices in the latter part of last week all but evaporated yesterday as Asian bourses gave Beijing’s latest efforts to support its waning economy a muted response. The largely risk-off environment came as Chinese officials gathered to set out the next five-year economic programme in which it may signal that it can no longer maintain a target of 7% GDP growth. The subdued tone was mirrored in Europe where bourses eased from multi-week highs despite a survey of German business confidence hinting that the VW scandal has been somewhat shrugged off by investors.

The return of Fed watch mode ahead of the two-day FOMC meeting further bolstered the cautionary backdrop as shares on Wall St treaded water with no change in policy expected but the post-meeting statement will be scoured for clues as to the likelihood of a December rate hike. Risk appetite was also capped by figures revealing that sales of new single-family homes fell by 11.5% in September to a 10-month low and brought to an end a recent good run of US housing reports.

A slow start for the week in the oil market confirmed the underlying negative sentiment. Trading ranges were narrow – all WTI managed was $1.30/bbl and Brent $1.03/bbl – whilst every contract registered further losses after Friday’s negative performances. WTI lost 62 cents/bbl and Brent 45 cents/bbl on the day. Heating Oil closed 285 points down and RBOB fell 157 points.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.