Spreadex Market Update
Brent Crude bounces away from lows but markets still suffering
Given the state of oil, and the gradually deepening shade of red in its commodity sector as a whole, it is fairly remarkable that the FTSE is only down by around 50 points at this point in time instead of facing a hefty 3 digit decline. Though oil is hogging the headlines the UK index’s mining stocks are truly woeful at the moment, with Lonmin’s South Africa government stake buying-losses (now down 10%) joined by a near 4% fall by Anglo American (following news that the S&P may downgrade the company’s rating to junk) and similar losses in the likes of BHP Billiton (at decade lows), Antofagasta and, of course, Glencore.
The Eurozone indices were just as bad as the FTSE this Monday afternoon despite the morning’s solid industrial data, the DAX and CAC dropping 100 and 40 points respectively. The Dow Jones was slightly stronger, an insipid (and data-less) start to the American session leaving the US index down by a manageable 20 points.
Whilst the relative lack of news has allowed commodities to rule this Monday, Tuesday presents a much busier schedule and, with it, a different set of problems. Inflation data is set to dominate, with the UK and US both revealing their latest figures. The US number is the more important of the two; expected at 0.0% against 0.2% last month, any dramatic movement downwards (however unlikely) could throw a spanner in the works ahead of Wednesday’s FOMC meeting. As that is the other reason Tuesday could be difficult; pre-Fed jitters have already added to today’s tricky trading, and with the proximity of that potential rate-hike growing ever closer investors’ nerves are only likely to intensify.
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