Spreadex Market Update
Classic comments from Draghi ensure European gains last through the afternoon
With tumbleweed running across this US-empty afternoon Mario Draghi took centre stage, his testimony in Brussels gaining that extra bit of influence due to the absence of anything else of note. In a typically unhurried manner the ECB President stated that ‘[the ECB] will not hesitate to act’ if it finds the need to following its review of the region’s inflationary pressures and the state of ‘transmission of [the ECB’s] monetary impulses by the financial system and in particular by banks’. The banking sector remained the focus of the Italian’s prepared comments, Draghi stating that ‘the situation…now is very different from what it was in 2012’, explicitly reassuring that the central bank is ‘in a good position to bring down [non-performing loans] in an orderly manner over the next few years’.
Whilst the Eurozone indices broadly remained unchanged, the DAX and CAC romping along at their 3.2% and 3.6% surges respectively, the euro seemed to take Draghi’s words as a statement of intent, the currency tumbling just shy of 1% against the dollar. The FTSE, meanwhile, managed to edge slightly higher this Monday, stretching out to around a 2.2% rise as Brent Crude crossed the $33.50 per barrel mark.
After the relative sparseness of last week’s economic calendar (perhaps barring Friday), Tuesday kicks off a data-splurge that lasts through to the end of Friday, with UK inflation (expected to increase to 0.3% from 0.2%) and the German and Eurozone-wide ZEW economic sentiment figures joined by the Empire State manufacturing index in the afternoon. If all goes to plan (especially in the Asian session) a positive set of numbers tomorrow should help Europe continue its current rebound; at least that is what happened last week, the few moments of country-specific data (namely on Wednesday and Friday) distracting from the miserable macro-landscape.
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