Spreadex Market Update
European indices rebound as Deutsche Bank leads sector recovery
The main focus of the morning, as for much of the week, has been Deutsche Bank. After falling to effective all-time lows during Tuesday’s torrid trading the German national bank has seen an incredible recovery this Wednesday, surging over 12% to tickle the €15 mark. It appears that those reports of Deutsche Bank potentially buying back debt has done far more to reassure investors than the comments from co-CEO John Ryan and German finance minister Wolfgang Schauble yesterday, and has inspired an impressive surge across the banking sector as a whole. In turn this has seen the DAX jump past the 9000 mark with a 2% rise, whilst the CAC (initially suffering under its weak industrial production data) is nearing 4100 with its own 2%-plus rise.
The FTSE wasn’t quite as cheerful as its Eurozone peers this Wednesday morning, though its 1% rise still sees it encroaching on the 5700 mark. The UK index is arguably being held back by two factors: firstly, following the example set by Germany and France the UK’s industrial and manufacturing figures came in (at -1.1% and -0.2% respectively) far worse than forecast, continuing to provoke fears over just how services-weighted the country’s growth is. Secondly, Brent Crude has slipped away its earlier highs, dipping just below $31 per barrel as the day went on; add onto that a dismal morning for Tullow Oil, which sank over 8% following the announcement of a $1.3 billion annual loss, and the oil sector is underperforming its mining colleagues.
Interestingly Wednesday’s biggest event is still to come, with Janet Yellen beginning her testimony in front of the House Financial Services Committee as 3pm this afternoon. The tone of Yellen’s comments, especially in regards to the Fed’s line of action in the coming months, could have a big effect on market sentiment, especially for the dollar. Currently, however, it looks like the Dow Jones has the all clear to join Europe in rebound-mode, the index looking at a 100 point-plus jump at the open.
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