Spreadex Market Update
Oil’s regression dominates the markets
As declines set in Brent Crude had managed to remain above $56 per barrel after investors were unwilling to push the commodity’s levels any higher. However, Brent shot down to $55 per barrel as the latest high US crude oil figure saw an increase of 6.3 million barrels following 8.9 and 10.1 million in the last 2 weeks.
Oil’s decline was bad news for the FTSE, despite the continued rally of copper. The index’s energy sector, its hero for the past few days, has turned sour and led the FTSE to shed much of yesterday’s gains. The FTSE was slightly eased by the positive reaction to GlaxoSmithKline’s disappointing fourth quarter, as the company’s 2014 was defined by its Advair patent-loss. However the signs of health for the upcoming year, especially its Novartis deal and the likely spin-off of its profitable ViiV Healthcare unit, lead the stock slightly higher after the announcement.
The Eurozone suffered under oil’s downward trajectory, and failed to be buoyed by the news coming out of Greece. Despite Varoufakis claiming the meeting was ‘fruitful’ there has been no official statement from the ECB. And in an ominous piece of news for Syriza, Angela Merkel’s statement that she sees no significant difference of opinion between key Eurozone members on the Greek-debt debate was joined by a leaked report showing that Germany is completely unwilling to tolerate a debt haircut, and is seeking a comment from Greece stating it will drop its pre-election promises. Despite Tspiras’ positive-sounding meetings with Francois Hollande and Jean-Claude Juncker, Varoufakis is having a tougher time winning allies, not a great sign ahead of his meeting with staunch debt-cut opposition Wolfgang Schauble tomorrow.
With a bearish sentiment in Europe, a disappointing ADP non-farm figure, and a flat ISM non-manufacturing PMI figure, the Dow Jones teetered on the edge of gains and losses as the afternoon went on. The ISM report suggested that the US economy is heading in the right direction, but that there are concerns over the country’s job figures. Its unemployment claims tomorrow will give a better indication of this trend ahead of the all-important non-farm data on Friday.
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