Spreadex Market Update
US markets down after CPI slip, Eurozone calm before next week’s storm
CPI has been a hot topic of late, with both the Eurozone and UK seeing this figure slip, the former enough to set the region in deflation. The USA couldn’t buck this trend, and saw its CPI fall to -0.4%, providing the Federal Reserve with another reason to delay a proposed raise in interest rates to the second half of 2015 at the earliest.
There was a silver lining for the US markets, as consumer sentiment grew to its highest figure in nearly 9 years, suggesting that the average American is hoping to see the upshot of cheap oil without actually feeling the effects in their wallets. However, today was the Dow’s final chance to reverse its 5 day slump before the US holiday on Monday, and the success of this aim is very much up in the air as the weight of its data eats into the Dow’s gains.
The FTSE spent the day valiantly trying to reduce this week’s losses as it was unshackled from the dual weights of copper and oil. Brent Crude has continued to crawl nearer to $50 per barrel which, after the way it started this week, would be a major coup for the commodity. Copper also managed to creep away from its 6 year lows, and currently looks less volatile that its liquid peer. This commodity-based-stability meant the UK index could instead focus on the bullish sentiment stemming from the Eurozone, as it seems all roads lead to QE.
Finally, the Eurozone once again changed direction after struggling this morning to find itself in the green. Quantitative easing is increasingly likely, and now the question is more what than if or when. The breadth of a potential ECB stimulus plan has still been kept under-wraps, and it is the Central Bank’s quietness on the topic that may prove to be the markets’ undoing.
Whilst in theory the Eurozone indices should be boosted by a QE announcement, much like the Nikkei in November, an intense pressure and high level of expectation has built up in the interim between the last ECB conference and next Thursday’s event. If Draghi doesn’t satisfy investors with the extent of his measures, the market effects of the stimulus plan may not be as boisterous as expected, especially with the wild card Greek election only a few days after.
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