'Momentum' in US economy boosts markets

Heading into the close, the FTSE is 90 points higher, lifted by hopes of a Greek deal, rising oil prices and some dovish Federal Reserve commentary.

US traders watch screens
Source: Bloomberg

UK markets see impressive rally

Markets have flung caution to the wind and rallied impressively during today’s session. The bounce in oil, now in its third day and still looking as if it has legs, has certainly helped, but it is Greece that is the source of real optimism. For the first time it looks as if the new Greek government is reacting, rather than driving events. A switch to a more conciliatory tone on the part of the finance minister and the prime minister has raised hopes that a deal may be possible. Added to that is the fact that the Germans have yet to completely dismiss the debt-swap idea, when normally a rejection would be swift and curt. Perhaps we will avoid another Greek crisis after all.

BP shares have slipped back from this morning’s highs, but other oil firms are surging as the commodity continues to find buyers. Miners have jumped on the bandwagon on hopes that the Chinese central bank might join the global easing party, dragging the FTSE back to the highs seen last week.  

Fed comments lift markets

US data might be turning sour, but it is never a bad idea to hope that regional Fed president James Bullard will step in to give markets a boost. True to form, he has opined that there is ‘momentum’ in the US economy, with low oil prices providing a further boost. Couple this with a bounce from the 200-day moving average and we have a powerful brew with which to lift markets. Earnings season has picked up from last week too, and markets are now inclined to hope that, if a Greek deal can be struck, the ECB’s quantitative easing programme will make for a much smoother road ahead.

Greek stability takes shine off gold

If Greece is on the verge of an agreement with its creditors, or is at least heading towards one, then gold is bound to lose its attractiveness. Other safe havens like treasuries have lost some of their appeal too, so it is not surprising to see the metal take another dive. Silver, by contrast, is bouncing along with other raw materials thanks to expectations of a pickup in Chinese industrial consumption. Then there is oil, which has enjoyed the combination of weakening supply and rising demand fundamentals to maintain its surge for another day. Oversupply does not disappear overnight, however, and the jury is still out on whether this bounce has much further to run.

Euro finds new strength

Greek hopes have made their presence felt in forex markets as well. The euro has found new strength versus both the pound and the US dollar, since it seems the currency union’s future is not as bleak as it seemed to be just a week ago. EUR/USD’s move back above $1.14 sees it break a level that has held the pair back for a week, a development likely to bring out technical buyers. James Bullard’s observation that the Fed’s overall move on rates should be slow and gradual has boosted the euro as well.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.