Spreadex Market Update
US markets lag European peers as FTSE and Dow see commodity sector divergence
Despite a stellar set of core (up 1.8% from -1.0% last month)and non-core (increasing to 4.9% from -5.0%) durable goods orders figures, the Dow Jones couldn’t muster the same energy as its European counterparts this Thursday, instead starting the American session fairly flat. This is in stark contrast to the FTSE, which sporadically galloped above the 6000 mark before settling into a 150 point surge, and the DAX, which overcame its earlier reticence to rise by around 180 points.
It is interesting to see such divergence between the two regions, especially the chasm in trading sentiment currently separating the FTSE and the Dow. Both have a tendency to be weighed down by their respective commodity sectors, the latter seeing an especially volatile session last night thanks to the choppy movements in the oil price. Yet whilst the UK oil and mining stocks (bar the odd anomaly like Rio Tinto and Premier Oil) are largely in the green, ignoring Brent Crude’s latest decline, their US counterparts are far more bearish this Thursday, Chevron (down 1.5%), ExxonMobil (slipping around 0.8%) and Caterpillar (falling roughly 1%) all preventing the Dow from joining the day’s rebound. It appears that the US index is sorely missing the earnings-focused gains the FTSE has seen today, with the incredible, dividend driven, performances of Lloyds and RSA Insurance helping overcome any potential negative sentiment following a rough Asian session.
Tomorrow, however, does see the US shift back into the limelight after the UK GDP and Eurozone inflation focused trading of Thursday. Not that that will necessarily be a good thing; already coming in at a disappointing annualised rate of 0.7% for the fourth quarter, Friday’s second estimate US GDP figure is set to drop to 0.4%, something that may only exacerbate the Dow’s current dreariness.
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