Spreadex Market Update
Investors mull over election results and FTSE continues to rise
Sunday evening saw the PBOC cut their interest rates once again to 5.1%. This is the third time in 6 months, causing investors to pile into Asian shares. The China A50 surged 3% and the Nikkei felt the ripple effect, ending up 1.3%. The interest rate cut came about as the PBOC’s worries over Chinese production and output continued over poor figures. Weak growth came in the first quarter as industrial production in March was at 5.6% which is a slowdown year on year. Investors will be looking ahead to Wednesday when the April IP figures will be announced.
After a weekend for investors to mull over the election results, European indices have - not surprisingly - opened pretty flat. The FTSE has continued to head in the right direction with a high this morning of 7087, this is well in sight of the all-time high for the FTSE of around 7130, so this could be a level to watch in the foreseeable future. The Bank of England will announce the official bank rate at midday. This is expected to be held constant at 0.5% and any different decision from Carney is likely to really disturb the market. So the story of the morning; the FTSE shows a continued confidence in the stability of the UK economy as we look to the future with David Cameron as Prime Minister.
However the DAX seems to have faded away this morning after a bounce back on Thursday and Friday last week. Old news seems to be inhibiting the growth of the German index once again – Greek jitters over repayments return to investors’ minds as the bullish breakout towards the end of last week disappears. Greek woes have of course influenced the FX market as some traders look ahead to the Eurogroup meeting where Merkel is under pressure to be strict with Greece. With the spotlight on her, will she make the decision to let Greece go? Furthermore EUR/USD has fallen away to $1.115 throughout the Asian trading hours. There may be further room for the Euro to worry as investors are continuously looking bearish on the currency pair.
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