Today's markets: Oil dips despite rising tensions

A much brighter start this morning in Europe following a day in the red yesterday. This morning, shares in London are up 0.4 per cent while the Dax is up 0.3 per cent. Prices in Paris are down slightly while oil has surprisingly dipped despite rising tensions in the Middle East. No macro factors affecting the FTSE’s risers and fallers today, although Frasers is down as it gets ready to battle with Mulberry, while Rightmove is up as its Australian suitors give up the chase. More on those stories here

There are a few things happening today that will keep traders busy. First, the Eurozone’s latest inflation print has shown that CPI is back below the European Central Bank’s 2 per cent target, good news given it was the first mover on cutting rates back in June. The ECB seemingly handling the tight balancing act well while the Federal Reserve and the Bank of England hope they have neither gone too big nor too late.

Eurozone inflation fell to 1.8 per cent in the 12 months to the end of September, falling below target for the first time in three years and a huge drop from August’s 2.2 per cent. Bets are all in for the ECB to cut rates again when it meets later this month, taking its base rate to 3.25 per cent. The euro and German bund yields fell on the news. 

Sticking with central banks, we’re expecting official job opening figures from the US later on today, with economists predicting a fall in August, somewhat justifying the Fed’s double cut last month. Markets have taken the 0.5-point cut in their stride but have also been distracted by China, and any news that suggests the double cut might have been too much, or too late could lead to volatility.  

Brent crude is down 1.9 per cent this morning based on lower demand from China, usurping the ever-escalating tensions in the Middle East. The China line goes against the bullish behaviour seen in markets over the past week, but as mentioned yesterday, with no trading in Hong Kong and Shanghai this week, there’s now time for everyone to fully reflect on whether last week’s stimulus is enough of a cure. We’ll find out what they think when markets open again next week.

By Neil Wilson, chief market analyst at Finalto