Spreadex Market Update
Budget and Fed double-whammy boost markets
Both sides of the US interest rate hike debate could pluck positives from Janet Yellen’s statement last night. The removal of the word ‘patient’ from the Fed’s current lexicon was one of the key things hawks were looking for ahead of the announcement, and will not doubt be pleased by the reduction in cautious language. On the other hand, Yellen was keen to emphasise that the Fed needs to see greater growth in the jobs sector before the institution moves to raise rates, buoying those doves that remain wary of the strong dollar. This combination of tone, no longer ‘patient’ but certainly not impatient, was a massive boon for the US markets, pushing them away from the pre-match jitters that had dragged down the indices in the build up to Yellen’s announcement.
The FTSE, which has so far avoided being negatively affected by the choppy waters in the US and Eurozone, is back to the highs it saw at the start of the month following a largely market-friendly Budget from George Osborne. Investors voted with their wallets yesterday afternoon, pushing the UK index into big gains as the oil, alcohol and savings sectors all benefited from Osborne’s comments. The UK will take a back seat once more in terms of economic data, but at open looks set to continue the growth it has seen all week.
Finally, after lending the spotlight to the US and UK on Wednesday, the Eurozone is providing investors with the latest EU economic summit for their pleasure. With the Greek financial nightmare ever-present, the region’s day is likely to be dominated by a slow leak of information from the summit; what remains unclear is whether anything of any real note will actually arise from the meetings, beyond the usual back-biting between Germany and Greece. What will be more concrete is the latest targeted LTRO release, forecast to be much lower than December’s figure. After slumping to more losses throughout yesterday, the Eurozone indices are looking much healthier this morning as investors seem ready to refresh the region’s positive run and share in the rich vein struck by the FTSE and Dow.
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