Spreadex Market Update
Bearish sentiment prevails as World Bank slashes forecasts
As the UK’s low inflation sparked fears about the worldwide state of inflation growth, unsurprisingly the FTSE reacted poorly to the World Bank’s news on a day that was already proving to be tricky. Just as the UK index managed to factor in the struggles of its oil-based stocks, with Brent Crude still threatening its $45 per barrel support level, the FTSE was struck by copper’s 6 year lows. Mining companies became the energy sector’s bleak bedfellows as KAZ Minerals, Vendanta Resources and Antofagasta all suffered precipitous drops, forcing the FTSE to shed yesterday’s gains.
This joined profit warnings for Game Digital, which fell nearly 40%, alongside worries for C&C, the owner of Magners, creating a pretty unenviable picture of the FTSE’s chances this Wednesday. The index will be looking to calming words from Bank of England Governor Mark Carney, in his first public address since the inflation fall, this afternoon.
The Eurozone had a busy morning, with the European Court of Justice ruling that the ECB’s Outright Monetary Transactions were legal, but only if it met certain conditions, the main one being the Central Bank cannot provide ‘direct’ assistance when buying debts issued by Eurozone members. This rather mixed message, confirming legality whilst suggesting constraints, meant that the region’s bearish sentiment this morning wasn’t reversed. However, this news also should have any major impact on the implementation of full-blown Eurozone QE, so this hope may be a factor for the Eurozone indices as the day progresses, as the pressure mounts for Draghi not to disappoint next week.
Finally, after the Dow Jones saw a third day of losses yesterday, currently the futures aren’t pointing to any reversal of fortune for the US markets. However, with core retail sales and import prices to be announced later this afternoon, a flurry of positive data could lead the US markets up the charts, and potentially inspire some bullish sentiment across the globe. Yet, this Christmas period has been particularly savage to many retail giants, so it may be the wrong figure at the wrong time for the US markets.
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