As London/European traders head for the exits, the major European indices are closing mostly lower. Spain’s Ibex is the exception, while France’s CAC leads the declines.
The closing levels show:
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Germany’s DAX: down 13.02 points, or 0.05%, at 25,306.76.
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France’s CAC: down 29.56 points, or 0.38%, at 7,838.50.
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UK’s FTSE 100: down 31.71 points, or 0.29%, at 10,732.99.
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Spain’s Ibex: up 53.10 points, or 0.28%, at 19,092.39.
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Italy’s FTSE MIB: down 14.92 points, or 0.03%, at 49,071.36.
Middle East headlines keep traders on their toes
The bigger story has been the volatility surrounding the US–Iran negotiations.
Earlier optimism followed an Al Araby Al Jadeed report that Qatar and Pakistan had presented a compromise proposal involving confidential IAEA visits to Iranian nuclear facilities and the release of $6 billion in interest on frozen Iranian funds. The proposal reportedly had US approval and some prior Iranian support, although outstanding differences remained and official confirmation was still needed.
That was enough to trigger a sharp market response. December crude oil, which had traded as high as $101.37, fell to $95.25. US Treasury yields moved lower, stocks received a lift, and the dollar came under pressure.
However, a subsequent report that talks were continuing—but that expectations of an imminent deal were misplaced—took some of the optimism out of the market. Oil rebounded above $97, Treasury yields recovered from their lows, and the dollar clawed back some of its losses.
Separately, Reuters reported that senior Iranian officials described Tehran as deliberately prolonging negotiations, underscoring the obstacles to a quick agreement.
For traders, the distinction matters. Continuing negotiations and reaching an agreement are two different milestones. Prices are reacting to changing probabilities, and each new headline can quickly reverse the previous move.
The GBPUSD provided a good example. Earlier dollar selling pushed the pair above its 100-day moving average at 1.33874. As the optimism faded, the price moved back below that level, bringing last week’s high near 1.3370 back into focus. The headline provided the shove. The technical levels helped measure whether buyers could sustain it.
European yields move lower
European benchmark 10-year yields were lower across the board:
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Germany:3.397%, down 6.6 basis points.
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France:4.921%, down 1.8 basis points.
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UK:5.408%, down 4.2 basis points.
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Spain:4.028%, down 6.8 basis points.
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Italy:4.526%, down 6.4 basis points.
European data present an uncomfortable mix
German producer prices rose 1.9% month over month, above the 1.5% estimate and 1.1% previously.
At the same time, confidence weakened. Germany’s ZEW economic sentiment index fell to 28.1, versus 30.2 expected and 34.7 previously. The broader eurozone measure declined to 18.5, below the 23.6 estimate and 25.8 prior reading.
Higher producer prices alongside weaker sentiment create an uncomfortable mix: more inflation pressure at the factory gate, with less confidence in the outlook.
US stocks: Dow leads as tech gains fade
At the supplied market snapshot, US stocks were mixed:
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Dow industrial average: up 479.05 points, or 0.92%, at 52,450.23.
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S&P 500: up 23.33 points, or 0.30%, at 7,714.06.
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Nasdaq Composite: up 15.30 points, or 0.06%, at 26,446.19.
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Russell 2000: up 45.81 points, or 1.68%, at 2,774.11.
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Nasdaq 100: down 8.79 points, or 0.03%, at 29,520.55.
The Nasdaq Composite had earlier reached 26,601, highlighting how much of the headline-driven advance had faded. Small caps and the Dow were showing considerably more strength.
US housing disappoints; Treasury curve flattens
US housing starts came in at 1.22 million, below 1.30 million expected. Pending home sales fell 7.3% month over month, much weaker than the 0.6% decline forecast. Building permits were slightly above expectations at 1.40 million, while ADP weekly employment increased 18,500, versus 26,000 previously.
Treasury yields showed longer maturities leading the decline:
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2-year:4.770%, up 0.9 basis point.
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5-year:4.918%, down 1.1 basis points.
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10-year:5.106%, down 3.0 basis points.
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30-year:5.429%, down 4.4 basis points.
Oil rebounds; silver and bitcoin advance
December crude oil was near $97.49, down 1.07%, but well above its $95.25 low. Gold was near $4,132, down about 0.2%, while silver rose 1.20% to $57.75. Bitcoin traded near $82,346, up 0.62%.
The next Middle East headline remains a potential catalyst. Traders have already seen how quickly optimism can build—and how quickly the price action can take some of it back. Stay on your toes.
This article was written by Greg Michalowski at investinglive.com.