Spreadex Market Update
Birthday boy Draghi gifts markets with a boost as he hints at more stimulus
Whilst Draghi claimed that the ECB didn’t discuss extending QE in today’s meeting, he emphasised the central bank’s ‘willingness and ability to act, if warranted’. Those comments harkened back to a time when investors would get all hot under the collar at the merest mention of ECB QE from Draghi, and helped lift the DAX and CAC to session highs in the process. Of course, it wasn’t all good news; the very reason for extended QE even being mentioned was cut forecasts for both the Eurozone’s inflation and GDP outlook. For 2015 the former was lowered to 0.1% from 0.3%, whilst the latter was cut from 1.5% to 1.4%, with slightly larger reductions for both in 2016 and 2017.
The FTSE got a bit of run-off Draghi goodwill this afternoon, approaching 6200 despite this morning’s 27-month low services figure. It helps that Brent Crude is up over 2%, causing pretty hefty gains for oil and mining stocks, especially BP and Rio Tinto. With little on the cards tomorrow, the FTSE will likely take a backseat to the excitement over the latest US non-farm figures, unless something special arises from Friday’s G20 meetings.
The US markets couldn’t match the robust growth seen in European this afternoon, with a normally Dow-boosting miss in jobless claims countered by another remarkably strong ISM non-manufacturing PMI. It may also be a case of investors with some pre-non-farm jitters; tomorrow’s number is arguably the most important piece of jobs data in 2015 so far, coming a time when a previously near-guaranteed September rate-hike has had a truck load of doubt cast upon it due to the manic scenes caused by China.
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