Spreadex Market Update
Eurozone responds positively to deflation news
Investors decided to take the positive view of the Eurozone’s slide into deflation, seeing it as yet another signal that ECB quantitative easing must be on its way, and ignoring the actual economic implications of such a fall. Unsurprisingly the euro was the main loser of this rally, hitting new 9 year lows as the currency was once more spooked by the spectre of Draghi’s QE push.
Across the board the Eurozone indices were in the green as they ready themselves for the decisive ECB meeting in a few weeks. Yet this day of positivity is no sign of long-term, or even short-term, health for the region as one imagines the true weight of today’s data may sink in tomorrow.
The FTSE spent the day riding the wave of Eurozone positivity as a quiet day for UK data meant the index was at the whim of the global markets. With the official bank rate set to remain the same for the time being tomorrow will see another relatively quiet day for the FTSE, with only figures from the troublesome housing sector to be announced.
The US markets put some distance between their recent losses this afternoon as ADP non-farm employment change numbers and trade balance data came in better than expected. This former figure is especially important, as it bodes well for Friday’s government released figure, and currently points to a strong end to the week for the Dow Jones and company. This evening sees the FOMC meeting minutes; with the Fed appearing to signal a move towards an interest rate rise, it will be interesting to see their reaction to the start of 2015 and the USA’s inconsistent recent data.
After an utterly dismal opening, oil managed to rebound as the day went on to stabilise around $51.5 per barrel in the afternoon. However, the US crude oil inventories put a spanner in the works; despite a fall in the number of barrels produced, a rise in gasoline had a negative effect on the commodity.
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