Spreadex Market Update
UK GDP sees big miss, whilst investors increasingly worried over potential Eurozone break-up
Once again the services sector is propping up weak industrial and construction figures, giving further credence to the argument that the economic rebalancing George Osborne promised has failed to materialise.
However, the silver lining for this weak GDP figure is that it lacks context; once the German and US data is released later in the week, this disappointing number could be framed rather differently. Nevertheless, context or not context the markets reacted badly to the news, with the FTSE widening its losses as the morning continued. This despite an impressive BP rally that has dragged the oil sector into the green after the commodity-giant managed to avoid the more dire earnings forecasts that were floating about yesterday.
The market goodwill felt last night after news leaked that Yanis Varoufakis was gradually being side-lined in talks between Greece and its creditors has all but disappeared this morning, as investors were once again presented with the realities of the unresolved saga. The DAX led the way in the region’s declines after a Sentix poll showed that a staggering 49% of investors think the Eurozone will see some form of break up, the highest percentage since Mario Draghi infamously promised to do ‘whatever it takes’ back in 2012.
Whilst things in Europe took an all-too-familiar downward turn, the US futures were flat-to-negative this Tuesday morning, as they awaited an afternoon of key data. American eyes will be on the CB consumer confidence figure, which rose back above 100 at the end of March, a position it is expected to cement later this afternoon. Investors will also be eager for leaks from the first day of the Federal Reserve’s latest meeting; after an April hike was ruled out, September is looking like the earliest date for an interest rate raise. However, the consistently soft nature of the USA’s recent data could see the return of a more ‘patient’ Fed, despite the door being opened for a 2015 rate rise.
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