REPORT
By Gökhan Kurtaran
London Letter for week beginning April 18

- Doha meeting

As Doha talks between the world’s top oil producers bore no positive outcome on capping the output aimed at easing the global supply glut on Sunday, U.S. benchmark West Texas Intermediate for May delivery was down 3.82 percent to $38.82. Brent crude, the global benchmark, lost 3.7 percent to $41.69 at 13:00 GMT.

According to Qatar's energy and industry minister, Mohammed bin Saleh al-Sada, the countries at the talks “need more time” for consultations before attempting to make a deal, which is anticipated at the next scheduled talks in June. As a result, the uncertain environment might cause more volatility for oil prices until June when the possibility of a more concrete result could be realized for long-term oil price projections.

“There could be more potential on the downside given that hedge funds were positioned relatively long before the meeting and have room to unwind their long position after having reached a 9-month high in the hope that the Doha meeting would have resulted in a better way,” according to London Capital Group’s statement.

 

- Brexit

EU referendum talks are continuing to add further tension in the U.K. as mounting risks are keeping investors away from capital investments. U.K. Chancellor Osborne claims that the economy may shrink by a significant 6 percent in the case of a 'Brexit'. According to Osborne, such an event could cause permanent, rather than temporary damage for the U.K.'s economy.

Osborne has defended claims an EU exit would cost households an average £4,300 a year. He also said that by 2030, the U.K. economy would be 6 percent smaller if it left the EU.

U.S. President Barack Obama is also expected to suggest that the British public vote to remain in the EU in his visit to London on April 22, according to recent reports.

Obama had previously said he wants the U.K. to stay in the EU and help maintain the post-war transatlantic partnership. However over the weekend,

London Mayor Boris Johnson, who is also the leading campaigner of the Brexit, accused Obama of "hypocrisy" over his support for the U.K. remaining in the EU.

A recent poll conducted by the FT shows that nearly 43 percent of the public still back to remain in the EU while 42 percent opt to leave the union. EU referendum polls in the U.K. are too close to call at the moment and are consequently increasing the ambiguous investment climate in the country.

 

- Labour statistics

U.K. labour market statistics will be released on Wednesday April 20 to be followed by U.K. retail sales figures on Thursday April 21.

Unemployment in the U.K. fell by 60,000 between October and December to 1.69 million, according to the Office for National Statistics. The rate of unemployment was unchanged from a month ago at 5.1 percent, maintaining a decade-low rate.

More than 31.4 million people are in work, the highest figure since records began in 1971.

19 Apr,2016

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