Spreadex Market Update
Eurozone enjoys its moment in the sun, Greek-clouds on the horizon
Investors took this morning’s PMI data as largely positive sign, despite a few bum notes, and the Eurozone indices continued their impressive gains, with the DAX especially setting new record highs as the day went on. In a similar, if downward, trend, the euro sunk to lows not seen in over 10 years against the dollar, at one point hitting 1.116.
However, things could all change by Monday. With a Greek election on Sunday ready to reintroduce Eurozone instability onto the markets, things might not look so rosy for the region come next week. As anti-bailout, anti-austerity Syriza extend their lead in the polls, their leader Alexis Tspiras ominously said he would work with his European peers, but not Angela Merkel. It is this kind of statement the market should be wary of; the ECB and the Eurozone in general may have a battle on their hands if Syriza can form a government in Greece as they seek to radically overhaul the country’s financial situation, a financial situation that is intrinsically linked to ECB and IMF monetary policy.
Elsewhere, the FTSE failed end the week on the strong sentiment it had struck for the past 6 days, as big losses for copper once again hit the index’s mining sector. After a fairly stable week, copper was down as much as 3.3% as the afternoon went on, and weighed heavily on stocks like Vendanta Resources, KAZ Minerals and Antofagasta, all of whom had recovered somewhat earlier in the week. This in turn led the FTSE marginally lower despite positive retail sales providing a slim rebound this morning. Unfortunately this is not the end to the week the FTSE would have wanted, as it is going to be as susceptible to next week’s potential Eurozone-mess as the region itself.
Finally, after appearing to reverse its New Year slump this week, the US markets were dealt a blow as both flash manufacturing data and existing home sales both came in lower than expected. This has been the trend for 2015’s US data, and after the astonishing run the Dow Jones went on last year, investors have been thoroughly disappointed in the USA’s start to the New Year.
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