FTSE lower amid slew of results
A similar scenario is being played out across other European stock markets where concerns over what the ECB might say about Europe’s economy later today also came into the mix. Europe’s central bankers could potentially further cut the growth forecasts for the region’s economy and could signal a new round of cheap money to prop up the Eurozone banks only months after they discontinued the previous programme.
Rio Tinto’s U-turn
Shares in Anglo-American mining giant Rio Tinto dropped over 7% this morning in a mixture of profit taking and a new forecast for iron ore prices. The price for the raw material which is used in making steel has spiked higher ever since a deadly dam burst at Brazilian producer Vale a month ago. Rio Tinto has been one of the main beneficiaries of that rally but as it became clear that other producers will start making up the loss in production Rio’s rally came to a sharp halt.
Russian steelmaker Evraz and BHP Group also traded lower but didn’t fall as sharply as Rio Tinto. Over the coming months the higher iron ore prices will leave an impact on the bottom lines of other industries which use large quantities of steel in their day-to-day operations, such as car makers and the construction industry. Look out for a slight dent in quarterly earnings at the next round of results.
Oil prices higher as US
The USA’s traditionally friendly relationship with Saudi Arabia is facing some strains as dissenting voices in Washington are getting louder. At a hearing to appoint new ambassadors to Saudi Arabia senators warned that the country is committing more and more human rights abuses and has played a significant role in the war in the Yemen. Consequently WTI oil prices are 0.6% higher this morning despite record high production in the US and rising levels of reserve stock.
The key now will be comments from President Trump who has over the past months complained about oil prices being too high. It will be a delicate juggling act for the US to balance out the need for its allies to be seen as fair while at the same time avoiding a spike in oil prices which would have a devastating effect on its economy.
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