Greek election overshadows QE speculation

Heading into the close the FTSE 100 is down 10 points at 6555 as the market tapers off.

Greek flag
Source: Bloomberg

Greece ahead of QE in traders' minds

Traders in London initially jumped on the quantitative easing speculation bandwagon but Mario Draghi has suggested additional easing one too many times. Eurozone equity markets have seen a wide trading range today as the prospect of quantitative easing from the European Central Bank sent stocks soaring, but it was short-lived.

The prospect of an anti-austerity party winning the up and coming Greek election has overshadowed Mario Draghi’s extra stimulus chatter. When it comes to the eurozone, traders don’t take any chances and the fear surrounding Greece greatly outweighs the glee of QE.  

Dow at 17,828

The Dow Jones is up five points at 17,828 as the US market is less sensitive to the comments from Mr Draghi. US equity traders are geographically and politically separated from Europe, and the suggestion of QE from the ECB carries less weight across the pond.

It has been a slow day in terms of news flow but both the ISM manufacturing and construction reports point to an easing of US growth. I fear US dealers are slipping back into the bad habit of secretly craving softer economic indicators to ensure the Federal Reserve will sit on its hands. 

Brent above $56

Gold has started 2015 the same way it finished 2014, in negative territory. Gold has lost its edge as traders plough their cash into government bonds if they seek a safe haven status. The metal will run into problems later this year when the Fed looks to increase interest rates, and when that day comes the metal won’t have a leg to stand on.

Brent is hovering above $56 as another sharp drop in the price has proved that the energy market is not stabilising. Admittedly, the oil market is taking bigger breaks between severe declines but the bulls are still nowhere to be seen. 

Pound at lowest level against dollar

The euro has started the New Year off on the wrong foot after Mario Draghi dropped another hint that he would embark on QE.

Mr Draghi has a track record of alluding to additional stimulus on the run up to the ECB meeting, but government bonds have yet to be acquired. Dealers don’t want to call Mr Draghi’s bluff when it comes to the possibility of quantitative easing, as the ECB chief knows full well.

The Australian dollar has been hit by feeble Chinese manufacturing figures as the slowdown in China is putting the brakes on the Australian mining boom. The slide in British manufacturing and a decline in UK mortgage approvals has pushed the pound to its lowest level against the US dollar since August 2013. 

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.