Weekly Trading Update
03.02.12 Friday Evening
The main theme for the markets this week seems to be a decline in Eurozone debt yields, especially for Italy and Spain. Worries over Europe’s sovereign debt crisis started to fade away this week as progress was made in Brussels between European leaders along with these lowering yields for the more vulnerable countries in the Euro area.
The ECBs LTRO programme showed signs of success this week as banks stated they are looking to borrow up to twice as much as they have already borrowed under the programme, helping remove the threat of a liquidity crisis within the European banking sector.
This gave the week’s rally a firm footing and contributed to the lower yields as the majority of this money borrowed goes straight into European bonds. China also stated this week that it wants to contribute more towards the EFSF, further boosting confidence as the larger the firewall Europe can achieve the better.
Merger talks between Glencore and Xstrata was also big news this week. The merger of broker and miner is a very unique one which would put the combined company in a very good position. The merger news also pushed up other mining stocks and along with the rise in financials due to the ECB’s LTRO programme helped boost the FTSE higher.
We had some very strong figures in the US this week, especially Non- Farm payrolls on Friday, with 93k more jobs created than expected for the month of January. The US seems to be growing at a good pace and is starting to leave Europe behind, putting doubts over fears that Europe would bring the world back into a global recession.
However the UK was warned on Friday by the National Institute of Economic and Social Research that it would experience negative growth for 2012, which if right will put the UK firmly into a double dip recession. However markets brushed off this news as the US put in a very strong performance, carrying on the bullish momentum for the week.
Open (Monday)
5705.8
Close (Thursday)
5796.3
Change
1.58
High
5851
Low
5649.8
Open (Monday)
12600
Close (Thursday)
12709
Change
0.86
High
12751
Low
12530
Open (Monday)
1731.6
Close (Thursday)
1763.9
Change
1.78
High
1763.9
Low
1719.3
Open (Monday)
1.5678
Close (Thursday)
1.5799
Change
0.77
High
1.5877
Low
1.5701
See our Economic Diary here.
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