Spreadex Market Update
DAX and Dow reverse yesterday’s gains, FTSE remains in the green
This morning’s jitters turned into a full-blown panic attack for the US markets, with investors seemingly worried that tomorrow’s Federal Reserve statement will not go their way. The Dow Jones was the biggest loser out of the US indices, dropping around 100 points from yesterday’s close; this frantic reaction from the US markets is likely to continue throughout Wednesday and into Thursday when the fallout from the Fed announcement will most fully be felt. Today’s issues were only exacerbated by a reportedly weather-damaged housing starts figure, continuing the problems highlighted by the NAHB housing market index yesterday.
The Eurozone’s Tuesday performance was nearly as bad today as it was good yesterday, with the DAX leading the charge in terms of the region’s declines. Whilst the DAX’s current price still remains far, far above where it was at the start of 2015, it looks like investors have had what will likely be only a momentary lapse in confidence in the German index.
Yet there are storm clouds on the horizon. Despite the constant ramping up of tensions between Germany and Greece, compared to this issue’s exalted position at the start of the year the ‘Grexit’ problem has operated very much at the back of investor’s minds since the start of QE; however, there is a chance that the subject could return to the forefront on Thursday when the latest EU economic summit begins, bringing with it the usual fiscal headache.
After being somewhat of an also-ran on Monday when compared to its more explosive peers, the FTSE outperformed the DAX and the Dow today by managing to hold onto its slight gains. What makes the FTSE’s relatively positive Tuesday all the more remarkable is the fact that oil has continued to decline, with Brent crude back to below $53 per barrel whilst light crude barely hangs on above $43 per barrel. The UK index’s resilience can be traced back to today’s oil sector strength. All of the FTSE’s major oil players, BP, Royal Dutch Shell and Premier Oil included, posted gains as the day went on, with investors sweeping in to buy up cheap stocks after nearly 6 days of sector-wide losses.
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