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Euro-Area Economic Confidence Jumps to Highest Since 2011

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  • Euro-Area Economic Confidence Jumps to Highest Since 2011

Euro-area economic confidence jumped to the highest since 2011 at the end of last year after the European Central Bank extended its stimulus and the recovery in the 19-nation region showed further signs of strengthening.

An index of executive and consumer sentiment increased to 107.8 in December from a revised 106.6 in November, the European Commission in Brussels said on Friday. That’s the strongest reading since March 2011 and compares with a forecast of 106.8 in a Bloomberg survey.

Economic momentum accelerated at the end of last year to the fastest in more than 5 1/2 years, according to a survey of purchasing managers, as the ECB extended quantitative easing to ensure a sustained pickup in inflation in a year of political uncertainty. While a surge in the cost of oil propelled consumer-price growth to the strongest in more than three years in December, underlying inflation pressures remained weak.

“In industry, we see a good recovery, both in Germany, where several industrial indicators have risen, as well as in the peripheral countries,” said Daniel Hartmann, an economist at Bantleon Bank in Zug, Switzerland. While rising oil prices may weigh on the economy, the global economic environment is positive, and “we continue to have tail winds from monetary policy.”

The euro was little changed after the report and traded at $1.0600 at 11:15 a.m. Frankfurt time.

Broad-Based Improvement

While the ECB will lower asset purchases to 60 billion euros ($64 billion) a month starting April, it prolonged the program that started in March 2014 through the end of the year. Policy makers have justified the reduction in the monthly QE amount with a “firming” economic recovery.

Sentiment improved across all sectors in December, with a gauge for industry jumping 1.2 points to 0.1, according to the report. A measure for services increased to 12.9 from 12.2, while consumer confidence was confirmed at minus 5.1, the highest level since April 2015.

Euro-area retail sales fell 0.4 percent in November from the previous month, according to a separate report from the European Union’s statistics office. In Germany, factory orders dropped 2.5 percent after a 5 percent surge in October, the country’s Economy Ministry said.

Trust in the region’s continued economic recovery is a reassuring sign in a year of potentially tumultuous politics.

France, Germany and the Netherlands will hold general elections in the next 12 months that are set to bolster support for populist parties, while the U.K. will start negotiating terms of its exit from the European Union and Donald Trump assumes the presidency in the U.S.

“The new year has several stumbling blocks along the way,” said Marco Wagner, an economist at Commerzbank AG in Frankfurt. Among other things, upcoming elections “will keep raising the question of EU unity whenever euro-skeptic parties achieve high results.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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Crude Oil

OPEC Says Uncertainties Remain High in 2021

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OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Brent Crude Oil Rose to $56.25 Per Barrel

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Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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