Spreadex Market Update
Markets turn sour as the euro and oil continue to struggle
The Eurozone continued to pump out bad news this afternoon, as German inflation fell to its lowest number in 5 years. The turmoil for Germany did not only stem from economic data, as Merkel’s government was forced to deny that the Chancellor wants Greece out of the EU, whilst the junior partner in the German coalition, the SPD, experienced a schism over how to deal with a potentially Syriza-led Greece. With the euro continuing to fall, and no end to this instability in sight, one cannot help feel that the Eurozone would rather this Greek election be over, Syriza win or no Syriza win, so the union could stop dealing in unstable hypotheticals.
With little in the way of significant data today, the US markets couldn’t help but follow the tone of the day set by a chaotic Europe this morning, leading the Dow Jones to continue its regression away from the 18000 level it hit pre-Christmas. Tomorrow sees more US data in ISM non-manufacturing PMI, all building toward the non-farm employment figures at the end of the week; the Dow Jones will be looking to these figures to reverse its fortunes as bullish sentiment from Europe has been non-existent.
Oil decided it wasn’t done hitting new lows as Brent Crude touched $53.89 per barrel this afternoon. The commodity is stuck in a spiral of decline, where every piece of data conspires against it, spooking investors and prolonging its price-crisis. It is looking more and more unlikely, if it ever looked likely in the first place, that oil will right itself; intervention surely will be needed if it is to start making significant gains any time soon.
Finally, as oil continued to shed points left, right and centre, the FTSE spent the afternoon being dragged down by the global malaise that has infected the markets. With its energy stocks hampered by the plunging price of oil, dismal construction PMI and the pound suffering alongside the euro, the FTSE had a worse than normal case of the Monday blues. The UK will announce its services PMI tomorrow morning; if it is anything like the other UK PMIs released recently, the FTSE may be in for a tough Tuesday to follow its maudlin Monday.
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