Markets React on Oil Output Cap and Euro Area uncertainty

Monday was a gloomy day for markets. Europe was under pressure, with the Italian banking sector suffering losses on worries that the outcome of the upcoming constitutional referendum could lead to Prime Minister Matteo Renzi’s resignation and the fall of the country’s banks.

The U.S markets were also modestly lower mostly influenced by rising concerns about the likeliness of the Organization of the Petroleum Exporting Countries (OPEC) to conclude the oil output freeze deal next Wednesday. Meanwhile, defensive sectors, Utilities and Telecom were the two sectors that saw the green light.

Eurozone Stimulus

Speaking to the European Parliament, the ECB president Mario Draghi stated that the monetary stimulus has been the main source of support for the ongoing economic recovery in the Eurozone. The rate-setter also announced the euro area economy is expected to continue to expand at a moderate but steady pace, along with the global economy, despite significant political and economic uncertainties. Mr Draghi urged policymakers to take action by implementing structural and fiscal policies, which are critical to reinforce growth and thus make monetary policy effective as markets became vulnerable in the aftermath of the financial crisis.

Talking Oil

Today, Oil traded in the green region, in view of the meeting for the regular summit of the OPEC in Vienna. The bullish wave came along with the arrival of Iraq's oil minister Jabar Ali al-Luaibi to OPEC's headquarters, where he indicated that he was "optimistic" a global output cap agreement could be reached. Futures for the delivery of the commodity in January rallied even though the dollar recuperated from significant losses against a basket of major currencies. January Futures on WTI oil surged around 2.6% and Brent leapt in the regions of 2.3%.

Corporate News: Lufthansa saga continues

Germany's flagship airline traded lower today after revealing it filed once more for an injunction of a pilots' strike has been resumed for another two days. Last week Deutsche Lufthansa AG cancelled 2,800 flights, with up to 400,000 passengers affected due to a four-day action by Vereinigung Cockpit union. On November 22, the Federal Labour Court in Frankfurt brushed off the company's request to avoid the walkout.

After the failure to agree on pay increases, the union agreed to call on the continuation of the strike. On Tuesday, only short-haul flights will be disturbed, while the next day all departures will be affected. Lufthansa's latest offer was for a cumulative pay rise of 4.4% by 2018, in addition to a one-time payment of salaries. Pilots have demanded 3.7% per year. Today the company's shares fell 2.18% to €12.35 per share.