Spreadex Market Update
FTSE continues on earnings-boosted run, US GDP to provide latest test of potential September lift-off
After its nightmare start to the week the UK index is currently on track for a third day of pretty robust gains meaning it could, providing there are no more China-inspired commodity wobbles before the end of tomorrow, finish July higher than it started.
The Eurozone saw similarly strong growth this morning, even if the DAX has slightly fallen away from its post-open peak. News has been trickling out from Greece, with Alexis Tsipras’ address to the rebel-filled Syriza central committee taking place against the backdrop of news that Greece’s economy is expected to shrink by 3.3% this year, compared to the much healthier 3% and 4% growth for Spain and Ireland respectively, the gap becoming even more pronounced when the similar (i.e. dire) post-crisis starting points are taken into consideration. This central committee meeting is largely to decide whether an emergency party conference and/or snap election is held in the coming months; even more drastically, a party referendum on the bailout could arrive this weekend, something that would put the current negotiations in serious jeopardy.
The US futures are creeping into green heading into the afternoon, but with the dollar and the Dow both tentative following yesterday’s Fed policy statement. As has been the case with most of the Fed’s statements of late, the tone was cautiously optimistic, with the promise of a measured approach to a rate hike not taking the central bank off of the path for a 2015 (i.e. September) lift-off. This afternoon will test this sentiment, with the usual unemployment claims (which have a big task head of them in trying to match last week’s four decade record) joined by the advanced GDP figures for the second quarter. Growth is expected to have picked up in the last quarter, with the chance of an upward revision for the first quarter’s dismal 0.2% contraction.
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