Spreadex Market Update
Post-China plunge commodity calamity continues to weigh on markets
As looked likely, the FTSE soon gave up its morning resilience after lunchtime, with Shell joining BP in painting the markets red with blood from the current corpse-like figure of the commodity sector. This means that, despite those recording breaking highs in the middle of April the FTSE is back at its 2015 starting point; the rampant optimism of the first few months of the year have all but been wiped out by the truly draining Greek saga and the embryonic crisis brewing in China.
Whilst this puts the FTSE on track for a 5th day of rather severe losses, tomorrow looks set to bring with it signs of improvement in UK growth as the preliminary Q2 GDP figure arrives. The market impact of the figure will depend on a) the accuracy of those positive predictions, b) what happens in China during Tuesday’s Asian session, and c) how dire the commodities are looking by tomorrow morning.
Anyone with nostalgia for the kind of Eurozone instability seen during the most testing periods of the Greek saga got a treat this Monday, as the DAX and CAC both saw some hefty 3 digit losses as the day went on. Both were, like the FTSE, sucked under by the general bearish trading that arose in the wake of the day’s Chinese sell-off, with the added bonus of a controversy over the currency-based ‘plan B’ Yanis Varoufakis was working on during his tenure as Greek finance minister. Because, of course, even during moments of high tension in other sectors and regions of the world, it’s always nice to have reminder of the perpetual nightmare machine that is Greece and the Eurozone in general.
Come the US open and, following hawk boosting durable goods orders, the Dow Jones was teetering on the edge of its own 3-digit decline. Interestingly, however, even with a strong afternoon of data the dollar took a bit of a beating from the pound and the euro. This perhaps is due to pre-FOMC statement jitters, with it unclear how firm the Fed will be in pointing towards a September lift-off on Wednesday.
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