Markets rise as Ukraine ceasefire agreed

European equity markets charge higher on ceasefire talks and more Scandinavian intervention, dragging a slightly reluctant FTSE along.

Frankfurt stock exchange
Source: Bloomberg

Ukraine news lifts markets

This morning Bank of England governor Mark Carney again held centre stage as he delivered both the latest inflation report and his highly anticipated open letter to George Osborne, explaining why he had missed the targeted rate of inflation. The BoE’s expectations, that we would again hit targeted 2% inflation levels within two years, was more encouraging than markets had been expecting.

It has become the norm for Greece to dominate European traders’ minds but the Scandinavian nations appear to be losing patience with this focus on the south, and buoyed by Denmark’s continued trimming of its interest rate, Sweden has gone one further. The Swedish central bank has announced a quantitative easing programme  and put interest rates into negative territory.

Angela Merkel and Francois Hollande’s efforts have not been in vain as they have managed to broker a ceasefire between Ukraine and Russia starting on Sunday 15 February. This step in the right direction has helped boost European equity markets previously panicked by political discussions around supplying Ukraine with arms.

Rio Tinto set the tone for the day with its pre-market figures, where it announced it would be returning $2 billion to shareholders and improving the company’s dividend. Subsequently, aided by copper’s rally, Vedanta has taken over the mantle of UK FTSE miner leading the index higher, as heading into the close it is up by almost 8%. In fact only Randgold Resources, held back by its exposure to gold, failed to add to the momentum the metals and mining sector have contributed to the day’s FTSE moves.

US retail sales data disappoints

We continue to see the last flurry of excitement from the US reporting season as we head towards a long Presidents weekend. Today it is the turn of Kraft, AIG and CBS to rustle up traders’ enthusiasm.

Today’s US economic data has also taken some of the wind out the sales as monthly core retail sales have fallen even more than expected, showing that the start of 2015 has done little to unshackle the hesitancy of shoppers.

Not content with breaking records and having a $700 billion market cap, Apple continues to set higher highs as shares are up again in early trading.

US light and Brent crude crawl higher

Oil prices continue to disregard the fundamentals of market oversupply as both US light and Brent crude squeeze 3% higher in mid-afternoon trading. As the OPEC nations continue to keep radio silence the relaxation in negativity has seen a relief rally pick up pace.

Gold’s lustre appears to have deserted it as it continues to break below moving averages and looks destined to move into oversold territory.  

Cable rallies through resistance

Mark Carney’s open letter to the Chancellor and the latest UK inflation report have triggered a rally in GBP/USD, as it has crashed through long-term moving average resistance and threatened to trade above $1.5400. Once the dust has settled it will still remain the case that interest rate rises are not being factored in until the fourth quarter, and the historical six-year run of low interest rates is set to last.

As the latest EU economic summit rumbles on, regardless of the seemingly perilous state of the Greek economy’s inclusion in the Eurozone, EUR/USD has been remarkably void of volatility.

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