Crude Drops to 7-month Low as Stocks Continue to Rally

European shares are higher on the session as the DAX reached a high of 12951.54 today, before falling back again amid an improvement in sentiment. Investors may have been spooked last week by more hawkish then expected Fed and BoE announcements, but as Fed’s Dudley reminded investors monetary expansion will still run a long time, even if global central bank support has peaked and sentiment is picking up with tech stocks rebounding globally. The Nikkei moved higher in Asia, after the S&P reached record highs Monday and with a weaker Yen underpinning exporters. Hang Send and CSI moved sideways as markets await decisions on MSCI index inclusions but European markets followed U.S. and Japan higher and after already picking up yesterday, the DAX jumped and even after falling back slightly remains at record highs. The FTSE 100 is up and still slightly below the records seen earlier in the month.

Crude Oil Tumbles to 7-month Low

WTI crude prices are lower down more than 3% at $43.35, with the market settling above the yesterday’s seven-week low at $44.05. The market has been in a distinct bear trend since late May, losing nearly 15% over this period. The global oversupply theme has been driving the market lower, despite the OPEC-led pledge to maintain its initial six-month agreement to curb supply by 1.8 million barrels per day by a further nine months. Rising supply in the U.S., Nigeria and Libya, alongside signs of a demand ebb in Asia, which is the biggest oil-consuming region in the world, have been weighing on crude prices.

The UK car industry at risk of permanent damage from Brexit warns the Society of Motor Manufacturers and Traders, arguing that an interim trade agreement between March 2019, when the UK will exit the EU, and the time when a full trade deal can be reached. The chief executive of SMMT highlighted that striking a post-Brexit trading deal would require the agreement of 27 nations, a process that would likely need five years, much more than 21 months available under Article 50. He also stressed that uncertainty risks death by a thousand cuts. Yesterday’s commencement of the negotiating process, which so far has focused on basic issues of procedure, has brought Brexit risks back into sharp focus. The pound is trading under pressure as there appears to be de facto shift to a softer Brexit stance, with the minority government now forced to take a consensus-building approach.