Oil prices won't top $100 in the next decade, OPEC predicts

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Crude will stay below the $100-a-barrel (bbl) level for at least the next 10 years, according to the Organization of Petroleum Exporting Countries (OPEC). Read More

Market buzz: FTSE falls below 7,000 ahead of BoE meeting, copper up
Thursday 22 Mar 2018

(ShareCast News) - 1109: Sterling's appreciation since the start of the week has clearly stemmed from the Brexit transition deal, says Rabobank, but today the focus of the pound will be firmly back on economic fundamentals and the degree of hawkishness from the BoE at today's policy meeting amid "mixed signals" from recent economic data. There is no strong expectation that the BoE is poised to hike rates today, with the market strongly priced for a 25 bps rate hike in May with a good chance of a follow on move by the end of the year. "This week's announcement of an EU/UK deal on the Brexit transition increases the risk of a second move this year," Rabo's Jane Foley says, though if Brexit trade talks stalling in the autumn or wages don't pick up "the Bank will likely find it difficult to pull the trigger in November". With a May rate hike almost fully priced in, along with a boost from the Brexit transition deal, Foley expects further near-term gains for GBP to be "difficult". 1020: Three-month LME copper up at $6,839 per tonne, versus the prior day close of $6,737, despite PBoC's decision overnight to nudge its reverse repo rate higher by five basis points to 2.55%. In parallel, the US dollar spot index is down 0.08% at 89.71, off its intra-day lows of 89.396. 0956: The FTSE 100 has broken below the 7,000 level, which it last clambered above in December 2016, with a fall of 40.4 point or 0.57% to 6,998.55. The pound looks has been a key part of this. Sterling's collapse post the Brexit referendum in 2016 helped boost the benchmark's large coterie of companies that make most of their earnings overseas. The pound has regained the $1.4 level recently. "The pound is trading higher this morning as we head towards the BoE decision; the centre point of this pivotal week for sterling. There will be no press conference at this meeting, so investors will extract all that they can from the voting spilt and the statement," says Fiona Cincotta, a market analyst at City Index. The BoE are broadly expected to keep rate on hold, though markets are currently pricing in a 66% probability for a May hike, which shoots up to 75% in June. "Any hawkish slant from the BoE in light of clearing headwinds, thanks to the Brexit transition deal and wages increasing above inflation, could give the pound an extra boost pushing GBP/USD towards $1.4280, a late Jan high. Traders will be particularly keen to see a voting split other than 9-0, for confirmation that the more hawkish MPC members are already setting their sights on a hike," Cincotta says. 0918: De La Rue's chief executive has called on the government to reverse its decision to award the contract for making post-Brexit blue passports to a Franco-Dutch company. Martin Sutherland said the decision was "disappointing and surprising" and bad for the economy. He invited Prime Minister Theresa May and Home Secretary Amber Rudd to visit his factory and justify the decision to De La Rue workers who have made UK passports for the past 10 years. 0909: Couple of notes from Goldman Sachs, including one on the "something for everyone" FOMC meeting last night. "We expect the next rate hike to come in June with subjective odds of 80%, and our baseline forecast remains four hikes in 2018 and another four hikes in 2019." Analysts also took a look at Just Eat. The decision to invest in delivery "is the correct one we believe", forecasting long-run UK EBITDA margins will remain above 50%. "Despite downgrades to estimates post recent management guidance, we continue to see Just Eat growing top line and EBITDA at a >20% CAGR over the next 3 years, leaving valuation favourable vs European peers." Remains a 'buy' on the bank's conviction list. 0902: Shares in IG are higher after it reported trading revenues surging 30% in a record quarter, thanks to a high level of client activity as market volatility returned. 0840: It's London's 'most companiest' - our catchy new slogan - market report, with 30 (count em!) companies mentioned - surely no other marker report comes near...? Stocks are edging lower in early trade on Thursday as investors shifted their attention to the Bank of England, after the US Federal Reserve hiked rates as expected a day earlier, while ex-dividend stocks weigh as they often do on a Thursday. At 0830 GMT, the FTSE 100 was down 0.3% to 7,019.28, while the pound was flat against the euro at 1.1459 and 0.2% firmer versus the dollar at 1.4168. Ex-divs were taking six points off the FTSE 100 and 21.5 points off the 250. Sky, British American Tobacco, Randgold Resources, Segro, Schroders, Meggitt, Centamin, GVC Holdings, Close Bros, Kier Group, OneSavings Bank, Stobart and Dunelm all went ex-dividend today. 0814: Reckitt Benckiser has walked away from discussions with Pfizer about buying parts of the US drugmaker's consumer healthcare business, leaving the way clear for GlaxoSmithKline. GSK will certainly be in a strong position to buy the business from Pfizer, which said in October it was considering selling or spinning off the division, which is valued at about $15bn. 0812: The FTSE 100 has opened in the red. The UK top flight index is down 0.3% to 7,016.28. 0803: Ted Baker shares are down as the clothing retailer reported a 12% jump in full-year pre-tax profit but the retailer warned that "external" trading conditions will remain challenging. Boss Ray Kelvin thanked staff "for their hard work and Tedication during the year". 0756: In London the main event is the Bank of England's monetary policy committee meeting, even though no immediate change to policy is expected. As there is no meeting in April, this is the committee's last real chance to lay the groundwork for a interest rate hike in May. Some analysts expect the monetary policy committee vote count to revert to a split, from the recent 9-0 consensus, with hawkishly inclined Michael Saunders and Ian McCafferty to again make the case for a hike.

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