European equities are expected to fall at the open on Wednesday as the turmoil in global oil markets continues. The FTSE is called down 55 points at 6,487, the German DAX down 92 points at 9,849 and the French CAC down 50 points at 4,240. Falling oil prices continue to weigh on global equity markets. On Tuesday, the commodity hit a near six-year low, extending losses after trading lower for seven straight weeks. U.S. crude settled down 18 cents at $45.89 a barrel, its lowest level since April 2009, while Brent crude was down $1 at $46 a barrel. So far this week Brent is down 8 percent and U.S. crude down about 5 percent. Copper prices have also hit an over five-year low as the investment in commodities falls. An oil minister from the Organization of Petroleum-Exporting Countries (OPEC) reiterated on Tuesday that the group would not be changing its production strategy. In other news, the World Bank on Tuesday lowered its global growth forecasts for 2015 and 2016 due to disappointing economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices. As markets continue to speculate on whether the European Central Bank (ECB) will launch a full-scale quantitative easing program, investors will get a further clue on Wednesday if a QE program would be legally viable. The European Court of Justice (ECJ) will issue a non-binding judgment on the legality of the controversial and yet untapped predecessor to QE – the Outright Monetary Transactions (OMT) bond buying program – that Germany previously opposed, saying it would see the ECB acting beyond its remit. The court is expected to issue its decision at 0830 GMT and although non-binding, the outcome will be seen as a green or red light for the ECB to launch a forthcoming QE program. The hope is that this mornings initial assessment (by the ECJ) will provide some form of political cover for the ECB to at least start on a framework on which to hang some sort of policy announcement next week, Michael Hewson, chief market analyst at CMC Markets U.K. said in a note Wednesday morning. Ahead of the World Economic Forum (WEF) held next week in Davos, Switzerland, an annual press conference will be held on Wednesday. Leaders from business, politics, academia, the media and civil society will discuss economic issues and the effect that problems such as poverty, conflict and climate change have on the world economy. Data releases include euro zone industrial production is released at 10:00 a.m. GMT and on the corporate front, Total and Burberry publish trading statements
Posted on: Wed, 14 Jan 2015 06:16:30 +0000
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