Spreadex Market Update

Equity markets have maintained yesterday’s price action



Equity markets have maintained yesterday’s price action by making steady gains throughout today’s session. The FTSE 100 closed up 25 points at 6,431, led by basic materials and oil & gas. The risk-off stocks, including utilities, underperformed.

Excess liquidity remains one of the principle drivers for stocks, cornering money managers into areas of the market that offer a higher yield. We’ve seen this theme for most of the year, driving yields lower on most peripheral European notes that investors actively avoided last year. Stocks have moved higher in sympathy.

The recent injection of liquidity from the Japanese central bank has affected prices dramatically. One point to note is how the inverse correlation between Yen and risk-on has increased lately. This was illustrated nicely last night when the Yen caught a bid against the fake terror tweet where few other currencies reacted. Needless to say, the Yen almost immediately gave back those gains when the tweet was confirmed as erroneous.

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