European markets are set to trade mixed on Wednesday with investors closely following political developments in Italy and a potential OPEC deal.
The FTSE 100 should open 8 points lower at 6,720; the French bourse is seen unchanged and the DAX is set to start 5 points higher at 10,612.
Oil markets were jittery on Wednesday as OPEC members gathered in Vienna trying to reach an agreement on a production cut. However, investors are concerned that a deal may not be reached between the group and oil prices could subsequently sink due to oversupply in the market.
Meanwhile, Sage Group, Britvic prelims, Zoopla and the Greek banks, Alpha and Piraeus are reporting their latest earning figures on Wednesday.
On the data front, there’s release of the euro zone flash inflation at 10 a.m. London time. The Bank of England is also publishing its Financial Stability Report and the results of stress tests for U.K. banks at 7 a.m. London time.
Asia markets were mixed on Wednesday, with energy stocks under pressure following overnight declines in oil prices and as traders waited to see if the world’s top oil producers would reach an agreement to cut production levels.
Japan’s Nikkei 225 closed flat at 18,308.48, while in South Korea, the Kospi gained 0.36 percent.
Australia’s ASX 200 fell 16.99 points, or 0.31 percent, to 5,440.50, with miners among the top losers on the index as the materials sector fell 2.83 percent. The energy sector was down 1.94 percent, following overnight losses in oil prices.
In Hong Kong, the Hang Seng index gained 0.30 percent. Chinese mainland markets traded lower, with the Shanghai composite down 1.08 percent, while the Shenzhen composite fell 0.25 percent.
Oil prices tumbled nearly 4 percent on Tuesday amid fresh uncertainties over an OPEC deal on production levels, Ministers from the 14-nation cartel are slated to meet in Vienna later Wednesday to announce a decision on output curbs proposed in September.
During Asian hours on Wednesday, U.S. crude futures rebounded slightly, up 0.66 percent at $45.53. Global benchmark Brent gained 1.01 percent to $46.85. Prices recovered on Wednesday in Asia after U.S. industry group, the American Petroleum Institute, reported a drop in crude oil inventories last week of 720,000 barrels.
The dollar pared earlier losses against the yen and euro and edged up on Wednesday, as U.S. debt yields resumed their ascent.
The greenback’s gains were limited, however, as traders braced for a meeting by the Organization of the Petroleum Exporting Countries (OPEC) later in the day which could spark volatility in financial markets and weigh on the U.S. currency.
The dollar rose 0.3 percent to 112.690 yen after going as low as 112.060.
It surged to 113.340 overnight on robust revised U.S. GDP data but had failed to sustain the gains as U.S. yields, a key driver of the dollar recently, initially pulled back from 16-month highs before rising in Asia on Wednesday.
The euro was down 0.2 percent at $1.0632 following a rise to $1.0660. It had gained 0.3 percent overnight.
The greenback has rallied 7 percent versus the yen and risen 3 percent against the euro in November. It was boosted as Donald Trump’s U.S. election win drove Treasury yields higher on expectations for stepped up fiscal spending, higher inflation and a faster pace of monetary tightening by the Federal Reserve.
Tuesday’s data saw the U.S. third quarter GDP revised up and November consumer confidence come in stronger than expected.
“These improvements confirm that a rate hike is coming on December 14th,” wrote Kathy Lien, managing director of FX strategy for BK Asset Management.
“They also boost the chance of further tightening in 2017 but with Fed fund futures only pricing in a 30 percent chance of another hike by May, investors see a hike followed by a long pause from the Fed, which is the biggest problem for the dollar,” Lien said.
Indeed, the dollar index was up 0.2 percent at 101.14 but some distance from a 13-1/2-year high of 102.05 reached last Thursday.