Spreadex Market Update
‘Black Monday’ gives way to calmer Tuesday as investors begin to pick up the pieces
In its latest move to stall the precipitous declines that have become the Chinese markets’ modus operandi, the People’s Bank of China injected the Shanghai Composite with a $24 billion boost intended to ease the strain the index has been under. However, like all the other large, but not large enough, cash bundles this injection couldn’t prevent the index from sinking by another 7.5%, ducking below 3000 for the first time in 8 months. The Chinese central bank remains a bungling bit-player in this nightmare, instead of the reassuring white knight the markets need it to be, something that could cause losses to return if the same price-eroding fears over the bank’s ineffectualness begin to creep in once again.
However, despite this latest China-slide, the European markets have begun to rebound this Tuesday morning. With Brent Crude and copper lifting away from yesterday’s 6 and a half year lows the FTSE was allowed a bit of breathing room after the bell, edging its way towards the 6000 level that it hadn’t fallen below since the very start of 2013. We aren’t completely out of the woods just yet, however; it is a long time until close and as the Nikkei showed this morning, the indices can quickly turn to losses after a seemingly positive day of trading.
The Eurozone indices enjoyed a similar climb to the FTSE, with the DAX and CAC gradually regaining some of the acres of ground they lost yesterday. Things were helped by a stable, as expected, 0.4% final German GDP figure, with the country’s Ifo business climate number still to come. The current calmness may even allow some news over the impending Greek election to be heard, a potential source of volatility that has been somewhat forgotten in the China-inspired chaos.
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