Spreadex Market Update
IMF downgrades growth forecasts, Europe sidesteps obstacle
With China’s GDP expanding a marginal 0.1% to 7.3%, the country saw its slowest growth in 24 years, prompting the International Monetary Fund to slash forecasts. This Chinese news, combined with the potential for recession in Russia alongside the perpetual weaknesses of the Eurozone was enough for the IMF to cut growth forecasts from 3.8% for 2015 to 3.3%. However, after the SSE saw its worst fall since 2008 yesterday, this minor growth in Chinese GDP led the index slightly higher.
This IMF announcement could have spelt bad news for the European markets are open; however, the FTSE, and DAX especially, managed to sidestep any obstacles to continue the significant gains that began last Friday. The German index is now closing in on the record highs it saw last week, and will be confident that, if the ECB meeting proceeds as expected on Thursday, it will be prompted to reach further highs like the Nikkei in its own post-QE honeymoon.
After having the day off yesterday, US futures are pointing to gains for this afternoon’s open, in what would be a much needed boost to the US markets. The Dow Jones especially has struggled since the New Year, as US data has consistently hampered its chances of growth. Despite the US returning from a holiday, the day is sparse for US data, with only the NAHB housing market index and a comment from FOMC member Jerome Powell to come this afternoon. However, any comments from a Federal Reserve member will be scrutinised as the question of raising interest rates still looms.
Finally, oil seems to be settling into a decline once more, as Brent Crude edges closer to $48 per barrel. After being the focus of global interest for so long, the commodity has been overshadowed recently by news arising from the Eurozone; yet this hasn’t stopped the black stuff from floundering, and it still threatens to sink back to the lows seen last week. Gold, on the other hand, is slowly encroaching on the $1300 per ounce mark that it hasn’t seen since August last year. The yellow metal was a big benefactor of the SNB currency-cap-removal, and looks set to gain from a weakened euro in the case of a QE announcement on Thursday.
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