Yesterday, the stock indices by results of trading sessions closed in different directions. Dow Jones slightly grew 0.01% (19123.58), S&P 500 was down 0.27% (2198.81), Nasdaq dipped by 1.05% (5323.68). Major European indices closed in the green zone. German DAX added 0,19% (10640,30), British FTSE 100 grew 0.17% percent (6783,79).
Today mostly will be published similar data from different countries on the index of business activity in the manufacturing sector, the PMI for November.
At 11:45 MSK PMI of Italy will be published, is expected to be at the level of 51.8, higher than the previous 50.9 per.
At 11:55 MSK PMI of Germany will be published, the projected level of 54.4.
At 12:00 MSK the level of the PMI for the Eurozone will be published, it is expected that the figure will remain at the same level of 53.7.
At 12:30 MSK UK PMI will be published, it is expected a slight growth of 0.2 to 54.5.
At 16:30 MSK in the U.S. FOMC member Mester speaks.
At 18:00 MSK US PMI from ISM will be published, is projected to rise by 0.3 to 52.2.
European indexes are growing due to support the positive rhetoric of the ECB President, Mario Draghi. In his recent statements, he reported a possible positive decision on the prolongation of the stimulus program after its completion in March 2017. Also he gave to understand about positive changes in the asset purchases program. He said inflation could reach 2% target in the next couple of years. The next meeting, where we may wait for the real action will take place in the next week of 8 December.
The British Royal Bank of Scotland (RBS) failed Stress test of the Bank of England. In the end, the creditor assigned to increase its capital for 2 billion pounds. As a result of RBS shares dipped by 1.43 % and is trading near historic lows.
Yesterday the main intrigue of recent months was solved. OPEC Ministers came to the agreement on the decrease of aggregate production by 1.2 million barrels to 32.5 million a day. Among other things noteworthy is the fact that such deals not been seen since the crisis of 2008. This gives the importance of the agreement and illustrates the drama of the current situation on the market, which has led to such measures.
It was difficult to reach agreement, investors no longer believed in the success of the negotiations. Iran flatly did not want to lower production volumes. Saudi Arabia wanted refuse to participate at any time. As a result, all come to compromise for the common benefit. The essence of the agreement that OPEC will reduce production for 600 MBD, in the case if other countries that are not members of the cartel will cut production by the same amount. At the same time Iran gets the privilege to increase oil production to 3.8 MBD, which is below their appetites 0.4 MBD. After this decision an important step should made Russia, which previously has expressed support for freezing the volume of production, but not reduction. Later in the evening it became known about the Russian agreement on the reduction of production volumes of 300 MDB, and it has preliminary agreements with other countries not OPEC members on reduction to 300 MBD. The final conclusion of these agreements can pass to the next week's OPEC meeting+ 9 Dec.
As a result, oil futures have shown explosive growth and continue to move up. An additional technical factor of growth for Brent oil today there was a transition to the February futures, which at the time of expiry of the previous contract was already trading at more than $1 a barrel higher. Also, amid the euphoria around the Vienna meeting report of the oil reserves in the United States left almost unnoticed. Reserves declined to the delight of the buyers by 0,884 million barrels despite of expected growth.
It is possible that a local maximum of $53,73 a barrel for Brent oil will be reached in the coming days.
Sincerely, Global FX chief analyst Sergey Melnikov.