Spreadex Market Update
Markets look limp after weak data from China and Europe
The first bad news of the day came as China saw inflation near a 5 year low. Such weakness in the world’s second largest economy was sure to make itself felt on the markets, and these figures led to a rather limp open for the FTSE and the Eurozone. Gold found positivity in this news after a tough two days following a dominant dollar, and the metal began to make back its losses as the week came to the close.
The Chinese doom was joined by European gloom as factory orders fell in both Germany and France in yet more dismal data from the Eurozone. After Draghi’s repetitive comments yesterday afternoon helped Thursday’s rally continue, investors were less impressed this morning as the reality of the Eurozone’s situation was felt. Yet this still didn’t provide much good news for the euro, which currently seems damned either way: if QE proceeds if will be hit like the yen was in November; if it doesn’t then the euro will still be dragged down by the Eurozone’s economic weaknesses.
With oil still hovering around its $51 per barrel support level, the FTSE had another morning free of energy-based woes. Yet it couldn’t translate this stability into gains as the dark clouds from China and Europe infected the UK index and led to minor losses after the bell. The FTSE’s morning was slight improved by better than expected manufacturing production and trade balance, but these figures couldn’t rescue the FTSE from looking tired at the end of the week.
Finally, after the Dow Jones closed in on 18000 last night as it rode the wave of positive sentiment stemming from the US Fed, the futures this morning at pointing to slight declines as the markets appear wary of this afternoon’s job data. A sense that these figures could disappoint has spooked investors; if they do come in lower than expected then the Dow could lose the major gains from the past two days.
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