Spreadex Market Update
Quiet Monday means Eurozone continues to bathe in QE hopes
The DAX spent the day near its all-time highs on the back of the Eurozone closing in on ECB QE, despite reports from Germany that the country is less than convinced over a potential stimulus plan from Draghi. There was news that leading German tabloid Bild ran headlines today promoting the ‘dangers’ of any QE plan, whilst there were also reports that the Bundesbank was desperately trying to limit the parameters of an ECB QE proposal. These stories were joined by France’s President Hollande stating that he expects sovereign debt buying to be announced on Thursday, only to go back on this statement and reassert the independence of the ECB.
However, the European muddle over the potential impact of QE, alongside when it will be implemented and what will be announced on Thursday couldn’t damage the bullish sentiment that was felt throughout the day. Yet with Chinese GDP to be announced in the early morning tomorrow, as well as a potentially disruptive German ZEW economic sentiment, there is still a way for the Eurozone to go before it can fully celebrate, or commiserate, over any QE announcement on Thursday.
Despite oil and copper slumping as the day went on, the FTSE was impervious to the commodity sector’s bullish attitude and continued to make gains after last Friday’s positive performance. The FTSE was helped by the continued New Year resurgence of Tesco, as well as a strong showing by Dixons Carphone, the company formed from the Dixons/Carphone Warehouse merger, which released its first ever Christmas trading statement this morning. Yet the eerie calm that has descended over the markets seems anomalous after the turbulence of last week, and with the ECB meeting looming on Thursday, it remains to be seen how long this stability can last.
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