Spreadex Market Update
Draghi takes centre stage once again as the US eyes Black Friday
After a week of disappointing European data, Draghi once again provided reassuring words, discussing the actions that could be taken in order to help the Eurozone escape its slump, whilst failing to confirm any actual dates or figures. The President stated that if inflation was to continue at its dismal lows, the European Central Bank was prepared to expand its asset purchase program in an attempt to lift the Eurozone out of the mire. Draghi also implied a wariness of quantitative easing, pointing to the yen’s depreciation after the Bank of Japan’s QE expansion as an example of potential problems.
The DAX, after closing at 9480.5 yesterday, opened this morning at 9514.5, and hit a morning high of 9600 after President Draghi’s speech. The euro, spooked by Draghi’s reminder of what can happen to the forex when quantitative easing is enforced, fell 0.6% this morning to linger around the 1.24657 mark.
Similar to Europe, the FTSE shook off yesterday’s dust and opened strongly at 6702.7 after closing out Thursday at 6681.5. In political news, UKIP took their second seat as they beat out the Tories, suggesting a fraught and unpredictable general election next year. This upsetting of the usual political order could cause a lot of volatility in the UK markets the closer the country gets to the general election next year.
After a weak opening yesterday, the Dow managed to escape the stranglehold of bad global data that had affected the European markets, rallying to another set of record highs as it looks toward Thanksgiving, and therefore Black Friday, next week. Its close of 17722.5 is the latest in its month long climb to daily records, a trend that looks set to continue as it is buoyed by the busy retail period in the next two weeks. The dollar’s surge against the yen appeared to slow down slightly, last night closing marginally higher yesterday at 117.936 after opening at 117.8. However, it awoke strongly today, opening at 118.245 as the USD/JPY claws its way up the charts, and is now knocking louder on the door of the 120 mark.
Finally, despite the weak data from Europe and China weighing on the markets yesterday, the positive data coming out of the USA gave the Nikkei a boost today, as it opened at 17317.5 and closed at 17427.5. In other Japanese news, Prime Minister Abe took the first concrete steps towards his previously announced snap election today as he dissolved the Japanese lower house. Whilst local polls show that Abe’s approval rating has slipped, but his Liberal Democratic Party is still expected to win. With the snap election only a few weeks away, Japan should retain its place as the resident wave-maker in the global markets.
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