The selloff on Wall Street continued

The selloff on Wall Street continued for a second-straight day as a selloff in energy weighed on risk sentiment. Wall Street gave up its early-session gains after energy stocks plunged on the back of a record losing streak in U.S. oil prices, which fell to a one-year low. In the wake of the recent selloff, U.S. stocks have more than pared their post-midterms gains, but analysts continue to suggest sentiment on risk will return as concerns about U.S. growth and policy are “overdone.”

The euro and sterling climbed higher on Wednesday as investor confidence rose on news Britain had struck a draft divorce deal with the European Union after more than a year of talks. The rise in the euro and sterling led investors to take profits on the U.S. dollar, which has retraced from a 16-month high. The euro’s gains, however, were tempered by concerns over Italy’s budget proposals. The European Commission rejected Italy’s plan last month and has threatened to impose penalties if it is not revised to conform with EU regulations – something Rome has indicated it is unwilling to do.

Oil markets fell again, extending losses from a 7 percent plunge the previous session as surging supply and the spectre of faltering demand scared off investors. Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown. OPEC has been making increasingly frequent public statements that it would start withholding crude in 2019 to tighten supply and prop up prices. That puts OPEC on a collision course with U.S. President Donald Trump, who publicly supports low oil prices and who has called on OPEC not to cut production.

U.S. West Texas Intermediate (WTI) crude oil futures were at $55.26 per barrel, down 43 cents, or 0.8 percent, from their last settlement. Brent crude oil futures were down 36 cents, or 0.6 percent, at $65.11 per barrel.

Gold, as of writing, is trading at $1,202/Oz, having bounced off the psychological support of $1,200 earlier today.

The Fed indicated earlier this month that it is still on course to hike interest rates in December. Interest rate increases, and higher U.S. bond yields are usually bearish for gold, which offers no yield. They also tend to boost the dollar, in which gold is priced. Powell will speak later in the day, reports citing analysts said Powell might attempt to calm concerns about the Fed hiking rates too fast.

In Europe, U.K. Prime Minister Theresa May will present a draft text of a Brexit withdrawal agreement to her senior ministers later in the day after both the UK and EU reached consensus on the Brexit divorce deal.