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Increase in inflation impacts markets
UK stocks were given a boost after the eurozone revealed a slight increase in inflation. Traders were starting to think the region was in the grips of a deflation spiral, but the increase in the cost of living should prevent any talk of negative interest rates in the region for a few months.
If the European Central Bank has to set interest rates below zero, it will be seen as an admission that the single currency has failed. Natural stocks are continuing to slide and the Chinese central bank's decision to curb the property market is reducing demand for minerals.
The Poundland IPO was valued in the region of £700-750 million region, but IG clients are suggesting the market capitalisation will be close to £1 billion pounds. Given the success of Twitter and Royal Mail IPO’s, IG clients have the strategy of 'in for a penny, in for a pound'.
US affected by unfavourable weather
In the US, the Dow Jones is up 89 points at 16,362 as US equities continue to view bad news as good news. The drop in fourth-quarter growth put the kibosh on tapering in the near future. Yesterday, Federal Reserve chair Janet Yellen gave the decline in economic activity a free pass as adverse weather conditions impacted businesses.
Traders await Chinese figures
Copper is set to finish down on the week, with demand for the red metal dwindling. The Chinese authorities are trying to keep a lid on the property market, and traders aren’t bullish about Beijing’s manufacturing figures set to be released this weekend.
Euro breaks difficult barrier
The EUR/USD has broken the $1.38 level as inflation in the eurozone was higher than expected in February. This has given the ECB a bit of breathing space as the calls to tackle deflation will be muted for the time being. With unemployment refusing to budge, I’m sure the calls for negative interest rates will resurface.