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.
FTSE fails at 6600 attempt
In mid-afternoon trading the FTSE 100 made an attempt on 6600, but it lacked the conviction to break through it. A sense of optimism still lingers around the trading floor as Mario Draghi is anticipated to reveal quantitative easing on Thursday. Mr Draghi has been in denial about falling prices in the eurozone, but the confirmed state of deflation will force him to act.
The mining sector is trying its best to drag the market into the red as traders square up their positions ahead of the Chinese GDP figures tonight, but there is no stopping the QE speculation. The Chinese authorities are cracking down on margin trading, and dealers are looking to the People's Bank of China for additional stimulus to pick up the slack.
The Greek general election is creeping up on the market, but traders have been distracted by the ECB meeting. A victory for the anti-austerity Syriza party, which appears to be pulling ahead in recent polls, could take the wind out of QE, scuppering Mr Draghi's attempt to save the eurozone.
The UK general election is edging closer and IG's binary bet on the number of seats each of the major parties will win is indicating that Labour is on track to win 285 seats, and the Conservatives are tipped to take 281 seats, in line with polls that show neither of the big two are on track for a resounding majority.
The NYSE is shut today as the US celebrates Martin Luther King Day.
Copper traders await Chinese figures
Copper is coming off hard and fast ahead of tonight’s Chinese growth figures. A downward slide in growth in the Chinese economy concerns metal traders, although there is growing speculation that Beijing will slash interest rates to counteract waning growth, but traders are not taking any chances.
Gold has shied away from the $1280 level however, traders won’t cut and run from the precious metal while the so-called ‘Grexit’ is a distinct possibility.
Oil continues to decrease under the pressure of Saudi Arabia, as one of the country’s former energy ministers suggested the nation can survive with a low oil price for nearly a decade. The dominant player is flexing its muscles and dealers dare not take the Saudi’s on.
Euro treads lightly
The euro has been treading lightly in what could be a make or break week for the single currency. The ECB meeting and the Greek election at the back end of this week will ensure the single currency is in for a rocky ride.
The mounting pressure on Mario Draghi is nearly at breaking point, and the ECB can’t keep crying QE forever, at some point he must act on his word or run the risk of losing credibility. Even if the euro survives the ECB meeting unscathed, the general election in Greece could potentially signal the last act of the Greek tragedy.
The pound has experienced a small trading range today as a bank holiday in the US ensured the currency markets were quiet. The voting breakdown from the Bank of England in the middle of the week will inject much need volatility into the currency pair, but the US recovery is starting to put the pound on the back foot.