Spreadex Market Update
Asian stocks swung between gains and losses overnight
Asian stocks swung between gains and losses overnight as investors become increasingly nervous on speculation the Federal Reserve may bring forward stimulus cuts. Data from the US yesterday showed better than expected Prelim GDP and Unemployment Claims. Today will give us further clarity into the state of the US economy with Non-Farm Employment change at 13:30. Investors are likely to tread carefully ahead of the figure after the Federal Reserve announced they are likely to cut stimulus if the US economy continues to improve. In recent weeks we have seen a string of good economic data from the US which could suggest we are edging closer to Fed tapering.
The euro continued to trade near five-week highs against the dollar following a statement from the European Central Bank yesterday which gave no fresh indication that it would ease policy anytime soon. With recent rumours that the ECB could use a negative deposit rate, Mario Draghi failed to mention this in his speech yesterday. He did mention the bank is ready to take fresh policy action to support a fragile recovery but was reluctant to provide details.
WTI crude headed for the biggest weekly gain in five months following data from the US which showed the economy grew at the fastest rate since the start of 2012. Inventories this week showed that stockpiles declined for the first time in 11 weeks supported the price of crude.
Japanese government bonds were under pressure overnight, with 10-year yields touching the highest level in nine weeks after a panel advising the world’s biggest retirement fund said it needs to cut bond holdings soon.
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