How FTSE 100 slumped to three-week low

November wasn't a great month for equities. Yes, Donald Trump's shock win in the US presidential election took Wall Street to record highs, and it was good news for some over here, but many struggled and the FTSE 100 lost 171 points. It's not been a great start to the new month either, and we're currently trading at a three-week low.

As traders peel open the first window on their advent calendars, all the news is of OPEC's historic deal to slash daily production by 1.2 million barrels. It looks like Russia will chip in to non-OPEC cuts of 600,000 barrels, too.

It looks good, and it is progress, especially since getting the cartel to agree anything can be like herding cats. But even now, a special monitoring committee will need a keen eye to make sure its members play by the book.

Shares in blue-chip heavyweights Royal Dutch Shell and BP and the other London-listed producers rocketed, of course. Scepticism has taken the shine off early increases, however, and the FTSE 100 is down over 1% Thursday at a low of 6,702.

I warned two weeks ago that "the prognosis does not look particularly good" after studying a simple chart pattern. An uptrend since June was confirmed in November, but each rally was met with a wave of selling.

Significantly, on Tuesday, the leading index finally closed below that trend line for the first time.

There's profit-taking in the mining sector, a star performer in November when Antofagasta soared 27%. Gold miners Fresnillo, Randgold and Polymetal are really hurting as the gold price kept falling as traders placed big bets that the Federal Reserve will raise rates this month.

Meanwhile, a stronger pound is diluting the benefits to overseas earners like Unilever and British American Tobacco - sterling just had its best month versus the euro in almost eight years and its best against the dollar since March. These "bond proxies" have also fallen out of favour since Trump won the presidency, as policy promises could be good for growth.

It's why the benchmark US 10-year Treasury yield just hit its highest since July 2015. As yields improve, income seekers tend to ditch risky assets like equities for the safety of government bonds.

Politics threaten

And it's politics which threaten another volatile month.

On Sunday, the Italians queue up to vote in a referendum on constitutional reform. A 'yes' vote gives prime minister Matteo Renzi the green light for ambitious reforms, which could reinvigorate a lacklustre economy. Vote 'no' and he's out of a job.

Elections both in France and Germany will almost certainly put the euro under more pressureIt could also spell disaster for the country and its financial system, already struggling under massive debts.

The same day, Austrians could elect their first far-right leader since World War II. And next Wednesday, the European Central Bank could confirm a six-month extension to its asset purchase programme past the March 2017 deadline.

A week later, a Federal Reserve meeting is widely tipped to result in only the second interest rate increase since 2006. Next year, elections both in France and Germany will almost certainly put the euro under further pressure.

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