Equity markets have started the day in positive fashion following on from yesterday’s solid start to the week. Overnight, Asian markets did little to derail the feel good factor generated from Mario Draghi’s speech yesterday. Institutional expectations that further strengthening of the current quantitative easing scheme would be announced in March looked well placed as the European Central Bank (ECB) president was at pains to stress action rather than rhetoric was required. This morning’s ZEW economic sentiment will give a little more direct clarity on how whole heartedly the business community have bought into the ECB’s tactics.
Saudi Arabia has finally agreed to a meeting of oil ministers taking place in Doha today. While it is not an official OPEC meeting but with Russian, Venezuelan, Nigerian and Saudi oil ministers all attending, most of the big oil producing nations were present. This has resulted in an agreement not to increase output from January’s production levels. Considering Iran was not present and has not made any such promises, the $4.50 spike in WTI and Brent could be a little on the pre-emptive side.
For the second day, gold has its sell-off, and is now oscillating around the psychologically important $1200 level. Once again, a decent run in the gold price has been used as an opportunity to sell into the precious metal. This time things did feel a little different and with the sustained period of low interest rates set to carry on for some time still to come, maybe gold bugs shouldn’t give up hope just yet.
EUR/USD continues to be the currency cross most likely to suffer from volatility this week as yesterday’s speech from the ECB president is merely the start of non-monetary policy meetings and EU summits all equally likely to highlight euro weakening issues.