Spreadex Market Update
More mixed messages from Eurozone; dollar decline boost Dow
In a style that was just classic Wolfy, the German finance minister claimed that the optimism surrounding a deal isn’t justified given the weakness of Greece’s proposed reforms; Francois Hollande, on the other hand, has given the vague time frame of ‘hours or days’ for a deal to arrive. The mixed messages left the Eurozone indices strong, but not quite as strong as they were during the bull-heavy lunchtime trading.
Whilst the Greece situation rumbled on, Mario Draghi held the latest ECB press conference. Draghi announced an upward revision in the region’s 2015 inflation forecast, something that allowed the euro-dollar to re-find some of its robust Tuesday form. However the central bank’s main man didn’t have purely positive effects this afternoon. When questioned on the recent movements in the bond markets, Draghi stated that investors should get used to ‘periods of higher volatility’, a warning that unsurprisingly brought with it a perfect example of what was being discussed as the German Bunds plummeted and yields hit a near 7 month high.
Today wasn’t just fun and games in the Eurozone. The US had its own data to deal with, and a combination of in-line ADP non-farm figures and a big miss for US ISM non-manufacturing PMI allowed the euro and pound to take back their losses from the dollar, and push the US markets higher in the process. The Dow is now at its highest price for a week and could grow even further once the instability-inducing European markets close for the day.
The FTSE was allowed to bask in the glow of its European cousins this afternoon, as the UK index overcame its morning meekness to put itself back on the road to 7000. An improved performance from its oil and mining stocks, helped by another low US crude oil inventories figure, meant that the FTSE could escape its commodity shackles and post significant growth as the day went on.
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