Indices are storming ahead this afternoon as dovish central banks once again intervene. Heading into the close, the FTSE 100 is up 70 points.
UK markets
----------------
Baton-passing is all the rage at the moment among central banks. When the Fed retires from easing, the BoJ takes over. Now, we have the sight of a handover in the space of a morning, as Mario Draghi hints at ECB QE and then steps back to allow China to cut interest rates. Either of these would have boosted stock markets, but both taking place on the same day as options expiry meant that the morning became one of high drama. Crucially for the FTSE, China’s move awakened the mining sector, with today’s rally in raw materials stocks showing just how much the sector had held back the FTSE rally since mid-October. Even gold and silver miners were on the march, as the yellow metal pushed back
through $1200. Meanwhile in Europe markets raced higher on hopes that continuing signs of deterioration and the big gap between the ECB’s December and January sessions will prompt the governing council to act. With the data moving his way, Mario Draghi is likely to become increasingly confident that he can sway other members to act – even in the face of German opposition.
US markets
----------
The market seems to be developing a momentum all of its own, as buyers that missed the rally are spooked into action as fresh all-time highs are seen in US indices. It looks like the pre-Thanksgiving rally has come early, although with holidays looming traders could be forgiven for wanting to eke out some more points at the beginning of next week. Even so, the feeling that a new pullback is due is gathering strength – it certainly would take a lot of the froth out of the market, and crucially allow more investors chasing good year-end figures time to get back on the bus. Before then, however, we need to get the US holiday out of the way, and with plenty of data on the ticket in the first
three days of next week equities could continue to gain ground for the time being.
Commodities
-----------
A breakout in gold has seen the price clear $1200, helped on its way by China’s decision to cut interest rates. Putting more money into the hands of Chinese consumers is bound to give a lift to gold prices, while ongoing reports that the Kremlin is stacking up on gold reserves has emboldened physical buyers. Meanwhile the ongoing weakness in oil was nicely illustrated by the inability of the price to hold gains from the morning session. Sellers have been waiting for a rally like this to leap back on the declining trend, and the morning bounce provided the ideal opportunity.
FX
--
A near 1% drop in the euro still shows that Mario Draghi’s jawboning works well when the time comes to push EUR/USD down. Having seen the $1.24 level probed last week, euro bulls were not keen to let another test occur and stepped in decisively. Expect to see more action in this area in the coming week, as sellers aim to try their luck once again. As the week winds down there is a continuation of the pullback in USD/JPY that began yesterday. With so many on one side of this trade, booking of profits is likely to continue, sending the pair further towards ¥116.
UK markets
----------------
Baton-passing is all the rage at the moment among central banks. When the Fed retires from easing, the BoJ takes over. Now, we have the sight of a handover in the space of a morning, as Mario Draghi hints at ECB QE and then steps back to allow China to cut interest rates. Either of these would have boosted stock markets, but both taking place on the same day as options expiry meant that the morning became one of high drama. Crucially for the FTSE, China’s move awakened the mining sector, with today’s rally in raw materials stocks showing just how much the sector had held back the FTSE rally since mid-October. Even gold and silver miners were on the march, as the yellow metal pushed back
through $1200. Meanwhile in Europe markets raced higher on hopes that continuing signs of deterioration and the big gap between the ECB’s December and January sessions will prompt the governing council to act. With the data moving his way, Mario Draghi is likely to become increasingly confident that he can sway other members to act – even in the face of German opposition.
US markets
----------
The market seems to be developing a momentum all of its own, as buyers that missed the rally are spooked into action as fresh all-time highs are seen in US indices. It looks like the pre-Thanksgiving rally has come early, although with holidays looming traders could be forgiven for wanting to eke out some more points at the beginning of next week. Even so, the feeling that a new pullback is due is gathering strength – it certainly would take a lot of the froth out of the market, and crucially allow more investors chasing good year-end figures time to get back on the bus. Before then, however, we need to get the US holiday out of the way, and with plenty of data on the ticket in the first
three days of next week equities could continue to gain ground for the time being.
Commodities
-----------
A breakout in gold has seen the price clear $1200, helped on its way by China’s decision to cut interest rates. Putting more money into the hands of Chinese consumers is bound to give a lift to gold prices, while ongoing reports that the Kremlin is stacking up on gold reserves has emboldened physical buyers. Meanwhile the ongoing weakness in oil was nicely illustrated by the inability of the price to hold gains from the morning session. Sellers have been waiting for a rally like this to leap back on the declining trend, and the morning bounce provided the ideal opportunity.
FX
--
A near 1% drop in the euro still shows that Mario Draghi’s jawboning works well when the time comes to push EUR/USD down. Having seen the $1.24 level probed last week, euro bulls were not keen to let another test occur and stepped in decisively. Expect to see more action in this area in the coming week, as sellers aim to try their luck once again. As the week winds down there is a continuation of the pullback in USD/JPY that began yesterday. With so many on one side of this trade, booking of profits is likely to continue, sending the pair further towards ¥116.
Recommended Content
Editors’ Picks
AUD/USD: Uptrend remains capped by 0.6650
AUD/USD could not sustain the multi-session march north and faltered once again ahead of the 0.6650 region on the back of the strong rebound in the Greenback and the prevailing risk-off mood.
EUR/USD meets a tough barrier around 1.0800
The resurgence of the bid bias in the Greenback weighed on the risk-linked assets and motivated EUR/USD to retreat to the 1.0750 region after another failed attempt to retest the 1.0800 zone.
Gold eases toward $2,310 amid a better market mood
After falling to $2,310 in the early European session, Gold recovered to the $2,310 area in the second half of the day. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% and helps XAU/USD find support.
Bitcoin price coils up for 20% climb, Standard Chartered forecasts more gains for BTC
Bitcoin (BTC) price remains devoid of directional bias, trading sideways as part of a horizontal chop. However, this may be short-lived as BTC price action consolidates in a bullish reversal pattern on the one-day time frame.
What does stagflation mean for commodity prices?
What a difference a quarter makes. The Federal Reserve rang in 2024 with a bout of optimism that inflation was coming down to their 2% target. But that optimism has now evaporated as the reality of stickier-than-expected inflation becomes more evident.