European open – Trade, Brexit, bitcoin, gold, oil

Santa running on fumes

It’s been a strong run up to Christmas for the stock markets and it seems traders are taking a little breather in this shortened trading week.

Source – Thomson Reuters Eikon

European stocks are trading slightly in negative territory at the start of the week, although there’s very little we can read into this, given the lower festive volumes and news flow. It’s been a good few week’s for investors, spurred primarily by the de-escalation in the trade war, with Trump only this weekend claiming it will be signed very shortly.

Driving home for Christmas

The passing of Boris’ Brexit withdrawal bill on Friday means MP’s in the UK can finally relax and enjoy all of the festivities that this time of year brings. Of course, it’s straight back to Brexit in January, during which lawmakers will spend three days debating the bill.

Sterling is steady this morning having come off its highs in the aftermath of the election result. Perhaps a little profit taking but also, of course, the additional of a legal end-date to the withdrawal bill, raising the risk of no-deal WTO Brexit. Still,it’s just about hanging in there above 1.30 against the US dollar.

Bitcoin enjoys some late festive cheer

There may be some cryptocurrency in the stocking this year, with bitcoin enjoying a late pre-Christmas surge. Bitcoin is now back in the $7,500-8,000 range where it’s struggled in the past, most recently on numerous occasions in late November and early December when similar rallies were cut short. There may be a little room to run yet but it will take something significant to make this next step.

Gold testing $1,480 again but struggling

Gold is making another push at a break above $1,480 on Monday, something we’ve seen repeatedly in recent weeks but without much success. Any break has so far been quickly sold into and ultimately failed but that doesn’t obviously mean it will continue. The recent trend has been more bullish but it’s struggling to gather any real upward momentum. I remain skeptical.

Crude seeing some profit taking after strong rally

We’re finally seeing some profit taking in oil but that doesn’t necessarily mean the rally has run out of steam. We’ve seen Brent pause around this area in the past but I don’t think it marks the end of the rally. There’s little evidence of it running on fumes just yet and the outlook will only brighten once there’s signatures on the phase one trade agreement between the US and China.

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