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FTSE firmly in red
Even resurgent US markets look unlikely to have the ability to drag the FTSE higher, following a week where the index has dropped over a hundred points – driven lower by global macro events, and almost ignoring both corporate and economic releases.
After the Russian government's statement outlining the retaliatory sanctions it would be imposing, the city has spent much of the day trying to asses which food-producing firms were most at risk from the sudden disappearance of Russian demand. These names were then added to the existing list of oil producers, commodity firms, European banks, airlines and German World Cup sponsoring sports companies already on the 'red' list.
Traders might hope that next week will bring more clement conditions, but with German ZEW and inflation figures set for release early in the week that could be a forlorn hope. Though many traders spent the morning wishing for this week to end, with a busy week ahead Monday morning will surely come around all too fast.
US markets bounce back
Ahead of the US open European traders were assuming a messy start to the US trading day, as a combination of northern Iraq, Gaza and sanction fears dominated thinking.
Once again European traders appear to have underestimated the American markets ability to look on the bright side of life. Barack Obama’s willingness to be proactive in tackling the ISIS forces in Iraq has helped move US equities higher in early trading, although this flurry of buying looks unlikely to dent the falls we have seen this week.
Oil prices bounce
The mere possibility that the US would be dropping more than just food parcels in the north of Iraq has seen gold wake itself from its slumber, and the longevity of this move will be dictated by what develops over the weekend.
OPEC’s downgrade of its future output, along with with the US presidents comments in the last 24 hours, have given rise to the long awaited bounce in the oil price, with many feeling it was already oversold.
UK trade balance data underwhelms
Having had a number of possible economic catalysts to kick-start the currency markets into action yesterday, we have been somewhat less spoiled today. Following the awful factory orders and industrial production data from Germany in the last couple of days, EUR/USD has been underwhelmed by the weaker-than-expected German trade balance figures. With a sizable proportion of UK companies complaining about the strength of sterling and currency headwinds in their quarterly figures, the low UK trade balance figures had already been anticipated by market watchers.