Spreadex Market Update
Eurozone economic sentiment data leaves markets looking out of breath despite year high UK inflation
Starting with the good news, the latest UK inflation figures came in at a year high of 0.3%, somewhat prematurely sparking talk of the Bank of England’s next move whilst causing the pound to consolidate its early gains against the dollar. The FTSE, however, wasn’t so lucky; with the excitement over the Saudi Arabia/Russia/OPEC meeting proving to be another example of the market’s naïve optimism when it comes to oil (the countries agreeing to keep production at the still too high January levels), Brent Crude tumbled back to $34 per barrel, taking the commodity sector (bar a few anomalies like BP and Shell) with it. That left the UK index stranded in no man’s land, losing its initial lustre to pootle about flat on the day.
Things were even worse in the Eurozone. Whilst the German and region-wide ZEW economic sentiment figures weren’t as bad as first thought, at 1.0 and 16.6 (compared to 10.2 and 22.7 last month) respectively they were still woeful (as in 15 to 16 month lows-woeful). In stark contrast to the Draghi-sustained surge on Monday the DAX (down nearly 60 points) and the CAC (relatively flat) look decidedly out of breath, the unsurprising but still damaging news causing investors to have a bit of a rethink about their recent bullishness.
It doesn’t look like things are going to improve this afternoon either; the Dow is looking at a 25 point drop at the open, with only the Empire State manufacturing index (forecast at -10.5 against -19.4 last month) to come.
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