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Monday is likely to be the calm before the storm, as a dearth of corporate and economic data will see traders scratching around for a sense of direction ahead of this week’s UK Budget and the Federal Open Market Committee’s (FOMC) interest rate decision.
Although originally targeted as one of the meetings where a rate rise would occur, the market is now only giving a 4% chance to the FOMC acting in March. Confirmation that China is set to return to their policy of infrastructure spending and equity market support has been as good an excuse as any to see the bulls hold the early morning upper-hand.
Unsurprisingly, as the Asian beast looks to be awakening from its slumber, the mining sector has been the major beneficiary in the FTSE. The first couple of hours trading has seen the mining sector climb by 2.43%, adding 6.9 points to the FTSE. This is 20% of the climb we have seen so far today.
Weekend press speculation and this morning’s price action both point towards an improvement in the London Stock Exchange Group and Deutsche Boerse deal coming to light, but as yet this story still remains thin of details.
Politics continue to be one of the biggest headwinds that markets will face this year, rather than US presidential shenanigans or squabbling over a Brexit, it is Germany’s snub to Angela Merkel that is in focus today.
Regardless of these issues, a somewhat delayed reaction to the boosted European Central Bank stimulus package announced last week has seen the DAX set the pace for the other European equity indices to follow, as it once again crosses above the 10,000 level.
This flurry of enthusiasm for the German index has seen 86% of the DAX’s constituents now trading above their 50-day moving average, with every member of the DAX in positive territory at the start of the week.
Equities are higher while oil prices are down, so the symmetry has been momentarily broken between the two. Saudi Arabia have just posted near record production levels for last month, while Iranian oil output has again increased.
The oil producing nations appear to be their own worst enemy as they continue to do little to tackle the saturation of global oil supply.