Spreadex Market Update
Markets calm down ahead of what is sure to be a stormy Friday
Unsurprisingly the turnaround has been at its biggest in the Eurozone, where the slightest whisper of news creates either euphoria or despair. Clarity on what is being offered to Greece by creditors, €10.9 billion in return for (unwelcome) pension and VAT reforms, a compromised collection of primary budget surplus targets and continued privatisation, alongside the confirmation of more meetings, be it between Tsipras and the Greek parliament or Tsipras and Juncker tomorrow, has calmed the more aggressively bearish attitudes of investors. Add in a reversal of the sell-off in the bond markets, and you’d be forgiven for thinking there had been little movement in the region this Thursday.
The IMF was a very busy bee this afternoon; as well as contending with the Greek situation, Lagarde and co. waded into the US interest rate debate, warning that the US Federal Reserve should delay any hike until the first half of 2016. The Washington-based institution feels that a rate hike isn’t a realistic proposal until significant improvements in wage growth and inflation are seen. The US markets had a rather muddled reaction to this news; the dollar levelled out against the pound and the euro despite this IMF comment being bad news for the greenback, whilst the Dow began to follow the downward trend of the European markets.
Whilst things may have calmed down somewhat in the Eurozone, the FTSE still had falling commodity stocks to deal with. Sustained losses for BP and Rio Tinto, representative of their sectors, has dragged the UK index down for the entire day, meaning it couldn’t match the recovery felt by its continental cousins.
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