The ZEW Indicator of Economic Sentiment for Germany jumped 20.7 points from a month earlier to -2.1 in November 2019, the highest since May and easily beating market expectations of -13. “There is growing hope that the international economic policy environment will improve in the near future, which explains the sharp rise in the ZEW Indicator of Economic Sentiment in November. In the meantime, the chances for a agreement between Great Britain and the EU and thus for a regulated withdrawal of Great Britain have noticeably increased. Punitive tariffs on car imports from the EU to the United States are also less likely than the projections a few weeks ago. An agreement in the trade conflict between the USA and China is appearing more likely too,” commented ZEW President Professor Achim Wambach. Also, the assessment of the economic situation in the country improved slightly by 0.6 points to -24.7.

The IBEX 35 index rose 17 points or 0.2% around 1 PM London time on Tuesday after El País reported that the leaders of the PSOE and Podemos have reached a preliminary agreement to form a coalition government in Spain. Pedro Sanchez's socialist party won the most seats in Sunday's election, but fell short of an absolute majority, amid increasing tensions with Catalonia. The combined number of deputies from both parties are still below the required 176 seats to secure a majority in parliament, which means Pedro Sanchez will have to team up with other parties if he wants to form a stable government.

The Euro slide to $1.1014 on Tuesday, the lowest since October 15th ahead of the US President Trump’s speech about US trade policy at the Economic Club of New York. Investors expect a delay in tariffs on European Union autos for another six months and positive developments regarding the US-China trade war and details about the partial trade deal between Washington and Beijing.

The NFIB Small Business Optimism Index in the US rose 0.6 points from the previous month to 102.4 in October 2019, but below market expectations of 103.5. Eight out of ten index components improved, as talk of a recession faded, supported by GDP-producing plans for job creation, inventory investment, and capital spending. Job creation exceeded that in September, as small businesses continued to hire and create new jobs. Capital spending went up and inventory investment rebounded from a modest negative level in the prior month. Rising labor compensation advanced and remained strong historically, and the frequency of plans to raise compensation also rose. Higher selling prices remained subdued, so rising labor costs are still not pushing up inflation on Main Street. The Uncertainty Index dropped 4 points, still remaining historically high heading into an election year.

European stock markets traded in the green on Tuesday, after the ZEW economic sentiment index came in better-than-expected for both the Euro Area and Germany. Investor sentiment has been lifted by expectations that US President Donald Trump will soon announce a delay in EU auto tariffs by another six months. Meantime, investors await President Trump to give more details on US-China phase one trade deal at the Economic Club of New York later in the day. The DAX 30 added 0.4%; the FTSE 100 and the CAC 40 gained 0.2% each; the FTSE MIB climbed 0.5%; and the IBEX 35 was up 0.3% around 10:25 am London time.

The ZEW Indicator of Economic Sentiment for the Euro Area rose by 22.5 points from the previous month to -1 in November 2019, better than market expectations of -32.5 and the highest since April. In November, 55.6 percent of the surveyed analysts expected no changes in economic activity and 22.7 percent expected it to deteriorated while 21.7 percent predicted an improvement in economic conditions. Meantime, the indicator of the current economic situation went up by 6.8 points to -19.6 and inflation expectations jumped by 11.2 points to 12.2.

Oil prices rebounded on Tuesday, as investors await President Trump’s speech to the Economic Club of New York later on Tuesday on hopes for any positive news about his administration’s prolonged trade war with China. Still, traders remain concerned about excess supplies of crude in 2020 as a 16-month trade conflict may cause a slowdown in global economic growth and hurt oil demand. US crude oil added as much as 0.4% to $57.06 per barrel while Brent crude traded above $62 per barrel, around 08:00 AM NY time.

UK workers' total earnings, including bonuses, advanced by an annual 3.6 percent to GBP 542 per week in the three months to September 2019, after a downwardly revised 3.7 percent gain in the prior period and missing market expectations of a 3.8 percent rise. Wages growth slowed in the public sector (3.2 percent vs 3.4 percent), services (3.6 percent vs 3.7 percent) and manufacturing (2.6 percent vs 2.8 percent); while remained steady in the private sector (at 3.7 percent), finance & business services (at 4.4 percent) and wholesaling, retailing, hotels & restaurants (at 3.1 percent). In contrast, wages increased faster in construction (6.0 percent vs 5.8 percent). Excluding bonuses, earnings were up 3.6 percent to GBP 508 per week, following a 3.8 percent increase in the previous period and missing market estimates of a 3.8 percent gain. In real terms, earnings including bonuses went up 1.8 percent, and those excluding bonuses rose 1.7 percent.

The New Zealand dollar fell as much as 0.5% to $0.6329 on Tuesday after the Reserve Bank of New Zealand's quarterly survey showed inflation expectations eased during the fourth quarter, adding to forecasts that the central bank will cut interest rates by 25bps when it meets on Wednesday.