Spreadex Market Update
US GDP and Eurozone inflation hit markets
First off, the Eurozone slipped further into deflation, as flash CPI fell to -0.6%, worse than expectations but not exactly surprising following Germany’s inflation issues earlier in the week. However, unemployment fell to 11.4%, a two year low for the region, providing a glimmer of good news for the perpetually inconsistent Eurozone.
After drawing focus much of the focus since Monday, the Syriza situation in Greece had a relatively quiet day, with finance minister Varoufakis and Eurogroup chief Dijusslbloem concluding that their talks today were ‘constructive’, whilst Varoufakis reaffirmed that Greece will not conform to the European Troika’s ‘mission’. There is a sense that behind these platitudes and smiles lingers a hostility that is likely to arise when it comes down to actual results, and has already peeked through with the ongoing Greece/Russia sanctions situation.
With the Eurozone deflation casting pallor over this morning’s trading, the USA then waded into the mix with a disappointing advance GDP that saw a fall to 2.6% after last quarter’s revised 5.0% figure. Despite a positive Chicago PMI and a solid revision to the UoM consumer sentiment, this GDP number is the one that matters, and provides even more fuel for the Fed’s patient fire in regards to delaying an interest rate hike.
Oil further stabilised this Friday as Russia provided a surprise rate cut from 17% to 15%, after the Kremlin claimed its rapid rate increase at the end of 2014 had helped the country’s CPI forecasts significantly enough. Brent Crude held onto its $49 per barrel mark and copper was back on the rise after a poor mid-week performance, causing some minor rebounds in the UK’s energy and mining sectors. However, the FTSE couldn’t escape the bearish tone of Friday afternoon’s trading and stumbled towards the end of January.
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