Spreadex Market Update
ECB Pulls The Plug on Markets – Stocks Plunge
Equities Rocked by ECB Gloom & Weak US Data
Equities were sent reeling yesterday as markets digested the latest wave of central bank tightening as well as the gloomy outlooks being offered by most. The ECB in particular was the main catalyst yesterday with Lagarde sounding the alarm over the eurozone economy next year. The Dax was seen falling sharply from the month’s highs, reversing lower by almost 5% in moves echoed across the board yesterday. Recession fears were further compounded by an unexpected drop in US retail sales which fell back into negative territory last month sending US stocks plunging also.
EUR Rallies, GBP Falls Following Central Bank Meetings
In FX, USD has swung back into demand into the end of the week following a more hawkish outlook from the Fed on Wednesday and the subsequent downturn in risk sentiment on the back of the ECB yesterday. EUR has remained well bid with traders eyeing further rate hikes to come in line with the bank’s upwardly revised inflation forecasts. GBP has suffered on the back of the BOE, falling across the board, with traders interpreting the BOE’s latest action as a ”dovish hike”. The split in voting suggests that momentum is turning in favour of the doves with markets now looking for just one more 50bps hike in Feb before the BOE pauses.
Metals & Crude Fall Ahead of Weekend
In the metals and commodities space, both gold and silver have turned sharply lower from recent highs in line with a stronger US Dollar. Silver prices have also been weighed on by the drop in equities, falling more than 5% from recent highs with both metals looking vulnerable to further losses near-term. The crude recovery has seemingly stalled into the end of the week with higher central bank rates and global recession fears taking hold once again.
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