Spreadex Market Update
Negative Eurozone inflation spurs on QE-seeking investors
A worse than expected Eurozone-wide unemployment figure, creeping up to 11% from 10.9%, alongside the news of negative inflation for the region as a whole, at -0.1% against the 0.0% expected, didn’t deter investors from leading the DAX 220 points higher, with the CAC seeing its own 3 digit jump. If anything these figures likely just spurred on the indices’ growth; whilst one month of negative inflation isn’t going to send Mario Draghi scrambling to open his big box of ECB QE, it does suggest that, perhaps, the central bank’s stimulus program isn’t having the same effect as it did when it was first introduced back in March, something that could lead to more quantitative easing going forwards.
The UK’s data was slightly less coded in its market boosting abilities; despite the ONS revising the country’s 2014 GDP down to 2.9% from 3%, the confirmation of a healthy second quarter GDP figure of 0.7% compared to the 0.4% seen in the first quarter leaves the UK’s growth at 5.9% above the pre-crisis highs. The morning’s added bonus was a dramatic reduction in the UK’s current account deficit, which fell to £16.8 billion from the £22.2 billion previously forecast. Combine these figures with a commodity sector that is still rebounding, and a Sainsbury’s-prompted surge in the supermarket stocks, and the FTSE widened its gains to around 120 points.
The US futures are appear just as healthy this morning, with the Dow Jones looking at a 200 point increase at the open. The reaction to this afternoon’s ADP non-farm and Chicago PMI figures should, in theory, provide more insight into where the index stands ahead of Friday’s jobs report, though the nuance-less market wide gains may make an accurate assessment difficult.
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