Spreadex Market Update
A flash crash in the Dax
Europe appears to be dominating the afternoon’s news cycle with a flash crash in the Dax at 12.45pm causing a plummet from 9180 to 9006 for three minutes before returning to the high 9100’s. The momentary trading halt appears to have been a blip as trading has resumed as normal with Eurex appearing to honour the trades. Should it prove to be yet another fat finger, it appears they would have no choice but to honour it following recent precedent of the HSBC trade.
Mario Draghi held a press conference this afternoon about the ECB’s decision to hold interest rates at 0.25% despite mounting concern over potential deflation. Stating long term inflation targets remain firmly anchored and the low inflation was driven by food and energy prices. Calling it subdued inflation rather than deflation he made it clear he would not be opposed to further cuts which analysts forecast could come as soon as March. The statement ready to take ‘decisive action’ should it be deemed necessary is likely to generate further volatility in the European markets.
US unemployment fell 20,000 to 331,000 beating forecasts of 337,000 leading to a boost in Dow futures before the open. The increase in demand for services and goods shows a confidence in the US recovery that it will continue to hold up as unemployment declines. Despite this confidence boost the trade deficit grew to $38.7 bn considerably larger than the $35.8bn forecast.
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