Stocks higher even as UK falls into recession

Chris Beauchamp IG

On a day that has seen two key economies fall into recession, it is odd to stock markets keep moving higher, but this market’s resilience continues to surprise investors, says Chris Beauchamp, Chief Market Analyst at online trading platform IG.

Stocks climb despite recession news

“Global stocks remain resilient despite the news that both Japan and the UK fell into recession in Q4 of last year. Today’s data has driven fresh hopes that rate cuts may be forthcoming in the UK, and with Germany also teetering on the brink of a recession, that the eurozone may see rate cuts sooner than anticipated.”

Still no sign of a pullback

“Tuesday’s US CPI data seemed to be the spark that would ignite a reasonable period of weakness in equities, but markets are rarely that obliging. While tech names are weaker today, there seems little news driving the move, and gains for the Dow and S&P 500 suggest it is more a period of rotation in global indices.”

Author

Chris Beauchamp

EUR/USD makes a U-turn, focus on 1.1900

EUR/USD’s recovery picks up further pace, prompting the pair to retarget the key 1.1900 barrier amid further loss of momentum in the US Dollar on Wednesday. Moving forward, investors are expected to remain focused on upcoming labour market figures and the always relevant US CPI prints on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.