Confidence undermines rally attempts

The attempted fightback for European indices failed to last any more than 30 minutes this morning, as the FTSE soon continued to move south.

Source: Bloomberg

As ever, the feeling is that wherever crude prices move, the indices will follow given a relationship which seems to be stronger than ever.

The issue here is one of confidence and unfortunately, the only confidence that seems to be evident is that of traders who believe both crude prices and subsequently the FTSE 100 will go down.

Today’s headline event is coming out of the European Central Bank, where Mario Draghi re-emerges to follow up on yet another disappointing meeting in December. The issue with Mr Draghi is that his ability to talk down the euro tends to outstrip any eventual policy shift, and thus the warm-up act is often better than the main event at the ECB.

Despite the strengthening of the single currency, alongside tumbling stock market valuations, there is little expectation by way of monetary policy changes today. Instead, we look once more for Mr Draghi to begin the job of jawboning the euro down with promises of potential future action.

The big potential movers for today’s meeting thus centre upon a dovish Draghi who could lead markets towards expectations of a March rate cut, alongside any reduction in inflation expectations to reflect tumbling crude prices.

Ahead of the open we expect the Dow Jones to start 87 points lower, at 15,679.

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.