Markets have been regaining ground as we end a hugely volatile week for financial markets. While the economic slowdown shows little signs of abating, markets are at least encouraged by growing expectations of further easing from the Fed and ECB.
- FTSE 100 gains ground despite rise in sterling
- ECB comments highlight expectation of bumper easing package
- US consumer sentiment tumbles, as the ongoing trade war dents growth outlook
Global markets are on the rise as we head towards the close of yet another hugely volatile week. Despite a delayed start, the FTSE 100 has enjoyed a positive end to the week, with the index rebounding from the six-year lows seen yesterday. Those gains come despite outperformance from the pound, with markets reacting to the news that Labour’s proposals could avoid a detrimental no-deal Brexit.
One of the main drivers of upside for stocks came out of the ECB, with comments from Finnish ECB member Rehn pointing towards a bumper package of stimulus at the September meeting. With markets currently pricing in a 100% chance of a rate cut from both the Fed and ECB, the question appears to be the size of such cut and whether we will see additional measures introduced at the same time. With treasury bond yields under pressure over the course of recent weeks, there is clearly sufficient anxiety to signal an impending decline in economic growth. Unfortunately, the slowdown continues to grow through the data, with US consumer sentiment tumbling into the lowest level in seven-months. That sharp decline in consumer sentiment runs contrary to Trump’s claims over how the US benefits from this trade war, for while the US may be outperforming, that is set within a global slowdown instigated by his policies.
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