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Dow relinquishes gains as bears bite back

Heading into the close the stronger dollar and eurozone concerns continue to keep markets in the red, with the FTSE down over 100 points.

US traders
Source: Bloomberg

FTSE loses ground

Rising share prices are few and far between on the FTSE 100 this afternoon, thanks to a heady cocktail of worries that has sent investors scurrying for safe havens.

Consumer prices in China might be holding up, but the decline in producer prices sent shockwaves through the mining sector in London. Combined with losses in the banking sector, the move dragged the index all the way back to early February levels and breaking a rising trend that has held all the way since mid-December.

A resurgence of concerns about Greece’s financial position has put eurozone markets on the defensive today as well. The latest deal between Greece and the rest of the eurozone always looked shaky, but recent  events seem to indicate that the wheels are coming off even quicker than many had anticipated. Greece seems determined to provoke the ire of the rest of the union, while Germany is ramping up the rhetoric once again. Even now however, dip buyers in the DAX are still active, determined to prevent anything but the smallest of declines for this star performer of 2015.

S&P 500 gives up 2015 gains

US indices bounced yesterday after their dramatic sell-off at the end of last week, but with the Apple event out of the way the bearish dynamic is at work once again.

The dollar may have been steadily appreciating for months now, but the prospect of earlier rate hikes in the US is boosting the appeal of Treasuries and leaving stocks friendless for the time being.

Today’s drop means that both the Dow Jones and S&P 500 have lost all the ground gained so far in 2015, which comes in stark contrast to the rapid appreciation of eurozone markets buoyed by the prospect of European Central Bank quantitative easing.

Apple shares have continued to retreat from their all-time high seen two weeks ago, as the uncomfortable realisation sets in  that the new watch does not appear to offer the same promise as the iPhone. Still, any addition to the table helps to reduce dependence on a single product, and one of the certainties of this market is that investors are still as keen to buy Apple shares as consumers are to buy their products.

Brent could return to January lows

Signs of weakness in China’s economy have put commodities in a risk-off frame of mind, on fears that demand from this corner of the global economy is on a diminishing path.

With warmer weather on the way for Europe and the US, the inventory demand that stimulated the bounce earlier this year is now fading, raising the prospect of a return to the lows of January for both Brent and US light crude.

Meanwhile the renewed enthusiasm for the dollar is doing nothing for gold, which continues to linger near $1163. 

No end in sight for euro selloff

The search for an end to the selling of EUR/USD continues, but with ECB QE in operation it looks like downward pressure will carry the euro ever closer to parity against the dollar. The slow disintegration of the recent Greece deal is not helping either, while most investors are prudently looking to boost dollar holdings at the expense of the euro.

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