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HL commentary as it happens
Thursday 11th December
Oil slips as oversupply concerns linger
Oil prices slipped, with Brent now below $62 a barrel, as hopes for a Ukraine peace plan sparked talk of Russian energy returning to Europe, easing supply fears that flared earlier this week. Traders had been rattled after the US intercepted a sanctioned tanker and Ukraine struck a vessel linked to Russia’s shadow fleet, but the mood shifted as OPEC+ output looks set to swamp tepid demand. With fresh reports from OPEC and the IEA due today, all eyes are on whether the market’s bearish tone deepens.
FTSE opens lower, Fed delivers rate cut
The FTSE 100 opened lower this morning, mirroring a cautious global tone. The US Fed trimmed rates as expected but signalled a long pause ahead, tempering optimism. Nine members were in favour of the 25bp cut, two preferring no change, and Steven Miran once again pushing for a bolder 50bp move. More eye-catching was the announcement of $40 billion in Treasury purchases starting almost immediately - a move that pundits are dubbing ‘QE light.’ Inflation remains stubborn, while job data holds steady, though policymakers have flagged employment as a growing concern. The decision makers have just one cut pencilled in for next year, but markets are still clinging to hopes for two.
Tuesday 9th December
Oil faces oversupply pressure
Brent crude oil is hovering near $62 a barrel after a 2% drop yesterday, as fresh supply concerns drown out geopolitical noise. Traders are bracing for IEA and OPEC+ updates later this week, with recent forecasts pointing to a surplus next year and Iraq’s restart of a key oilfield adding to the pressure. Rate-cut hopes from the Fed could offer a lifeline for demand, but for now, the bears have the upper hand.
FTSE 100 flat as UK retail data comes in soft
The FTSE 100 opened flat this morning as investors digested softer UK retail data. BRC figures showed like-for-like sales up just 1.2% in November, the weakest growth in six months, as shoppers held back ahead of Rachel Reeves’ Budget and Black Friday failed to impress - underscoring a cautious consumer backdrop.
Monday 8th December
Oil prices up with geopolitical pressure elevated
Brent Crude oil prices have strengthened to $63.8 per barrel. The potential for further rate cuts to stimulate demand, as well as ongoing concerns of oversupply, are being overshadowed by a lack of progress in finding a lasting peace between Russia and Ukraine, and with it sanctions on exports of Russian fossil fuels. The rising possibility of US military action in Venezuela puts a further 1.1 million barrels of daily production at risk.
Quarter point rate cut expected by the Fed on Wednesday
Events in the United States that will take centre stage this week. Anything other than a quarter point cut to Fed Funds Rates on Wednesday will come as a big surprise but cast your eyes forward 12 months and the waters become much muddier. Markets see two further quarter point cuts as the most likely outcome but the probability of a doveish third cut, or just a hawkish single cut isn’t that far behind. It’s commentary for 2026 and beyond that’s likely to be the key focus for markets.
With US jobs under pressure, inflation still above target, and lending rates 1.5 percentage points below the peak, already it’s a balancing act that’s becoming ever trickier. One thing looks certain, the days of sub 1% rates borrowers became accustomed to post the Great Financial Crisis are over with theoretical ‘neutral’ rates more likely to be in the 3% region. That’s not necessarily a problem though and remains relatively benign by historical standards. One thing that can help the economy tolerate a higher neutral rate is productivity growth. There’s a lot of hope resting on Artificial Intelligence to provide that boost, but as with all technological shifts, the size and speed of this change is difficult to second guess
UK retail sales and GDP numbers due this week
The FTSE is holding its head above water this morning after a weak session on Friday.
Key UK data points to look out for this week include November’s retail sales figures which are scheduled Tuesday. The previous month saw sales contract by 1.2% and with pre-budget caution likely to have dominated in November and accountants BDO playing down the success of Black Friday promotions, tomorrow’s numbers could struggle to get back into positive territory.
Turning to the wider economy, GDP numbers for October are expected to land on Friday. Forecasts are looking for a 10-basis point acceleration in monthly growth to 0.2% after a cyber-attack at Jaguar Land Rover weighed on the September numbers.