European Stocks Slide as Euro Generates Headwinds

European stock markets are mostly down, after a largely negative session in Asia. The Topix pared weekly gains as the Yen held gains and investors eye political events in the U.S. For DAX lower yields were of little help, amid the strong EUR and the escalating row between Germany and Turkey is also viewed with concern, as German companies are accused of “terror links”. The DAX is down while Italian and Spanish markets underperformed. The FTSE 100 meanwhile is hanging on to marginal gains, despite a stronger pound, amid leaked stories in today’s papers saying the government is now united in its support for a transitional period post Brexit, that would see the U.K. staying in the single market and the customs union beyond 2019.

WTI crude prices are down showing a 0.5% gain. Weakness in the dollar was unable to help keep oil prices buoyed, while the breach in the Brent benchmark above $50.0 over the last day is also being seen as bullish-affirming price action. The looming OPEC-led meeting of major oil producers on Monday in St. Petersburg is an added bullish influence, along with tensions between Kuwait and Iran. The UAB’s energy minister said today that he hoped the OPEC-led production trimming would have a significant impact on crude prices in the third and fourth quarter. WTI crude futures clocked a six-week high at $47.73 Thursday.

The ECB Survey Shows Inflation Outlook Was Cut

ECB survey shows forecasters cut inflation outlook, up growth forecast. The ECB’s latest survey of professional forecasters showed that inflation forecasts for the period to 2019 have been cut by 0.1% points throughout, but the long-term forecast was still left unchanged at 1.8%. The new projections see inflation at just 1.6% in 2019, still clearly below the ECB’s 2% limit for price stability. At the same time, growth forecasts were lifted to 1.9% this year, 1.8% next and 1.6% in 2019, from 1.7%, 1.6% and 1.5% respectively previously. The longer-term growth forecast was left unchanged at 1.6%. Unemployment forecasts were also cut back, but that doesn’t seem to have impacted inflation expectations.

The relations between Germany and Turkey have been shaky since Turkey started to arrest German journalists and human rights activists and Erogan tried to take the campaign for his referendum to Germany to address resident Turks. The row escalated yesterday after Turkey blacklisted German companies including Daimler and BASF as supporting terrorism. German foreign minister Gabriel Thursday said the foreign office will be revising its travel advice for Turkey and suggested official Hermes guarantees for trade with Turkey will be reviewed.