Eurozone euphoric after Draghi doesn’t disappoint

Unsurprisingly the Eurozone indices were still basking in the glow of yesterday’s big QE-reveal with the DAX besting the record highs it had reached this time last week.

However, there was a fly in the ointment, as manufacturing and services PMI across the region was either flat or falling; the markets may be positive but Europe has a long way to go before it fully recovers.

The euro was haunted by the ghosts of QE-past, as it went the way of the yen and plummeted against the dollar. Now trading around 1.126, the euro’s torrid time sees no sign of any short-term change as its value was effectively sacrificed for the hopes that region-wide QE will rectify the multitude of issues plaguing the Eurozone.

After closing a smidgen above $1300 per pounce, gold spent the early hours of trading struggling to maintain the head of steam it built up yesterday. Whilst still hovering near the psychologically significant price, the metal’s likelihood for solidifying this level will be reliant on how the euro performs as the day goes on.

The FTSE was a big winner yesterday, reaching its highest price since September 2014. However returning poor form for its energy and mining stocks, and weakened cable, weighed heavy on the index and it opened rather flat this morning. A recovery in retail sales, up to 0.4% from last month’s disappointing -0.6%, began a minor rebound, and the UK index will be looking to borrow some of the bullish sentiment that has engulfed the Eurozone this afternoon.

The US indices piggy-backed onto the swell of bullish sentiment that flooded markets yesterday after and saw their third day of gains. Another light day of data for the US brings flash manufacturing PMI and existing home sales announced this afternoon; the former has been an issue for Europe this morning, whilst the latter has caused problems for the US in the past. If the Dow Jones is to get near recovering the 18000 level it reached in 2014, it will need to rediscover the resilience it gained at the tail end of last year.

Oil managed to weather the absurdly high US crude oil inventories figure yesterday as Brent Crude continues to stabilise around $49 per barrel. And in a morbid boost, the death of Saudi Arabian King Abdullah led prices higher as the chance for a change in Saudi oil policy arises; however, with the new Saudi king expected to maintain the country’s current oil strategy, this hope may be misplaced.